-Refer to Exhibit 9-4.When AD and SRAS cross at the point at which the price level is equal to P₁ and Real GDP is equal to Q₃,the economy is in A) a recessionary gap. B) an inflationary gap. C) long-run equilibrium. D) a and c E) b and c

Question

Quizplus · Accepted Answer

When the Aggregate Demand (AD) curve and the Short-Run Aggregate Supply (SRAS) curve intersect at a point that also aligns with the Long-Run Aggregate Supply (LRAS) curve, the economy is considered to be in long-run equilibrium. This is because the actual output equals potential output, and there are no pressures for the price level or output to change in the short run.