When the economy is in short-run equilibrium,
A) there are increases in inventory.
B) there are decreases in inventory.
C) total expenditures equal total production.
D) people want to buy more than will be produced.

Question

Quizplus · Accepted Answer

In short-run equilibrium, total expenditures (i.e. aggregate demand) equal total production (i.e. aggregate supply). This means that there are neither shortages nor surpluses of goods and services, and the economy is operating efficiently. Therefore, options A, B, and D are incorrect.

When the Economy Is in Short-Run Equilibrium