A short-run equilibrium occurs
A)at the intersection of the short-run aggregate supply curve and the long-run aggregate supply curve.
B)at the intersection of the short-run aggregate supply curve and the aggregate demand curve.
C)at the intersection of the short-run aggregate supply curve,the long-run aggregate supply curve,and the aggregate demand curve.
D)when the rate at which prices increase equals the rate at which input prices increase.

Question

Quizplus · Accepted Answer

A short-run equilibrium occurs where the short-run aggregate supply (SRAS) curve intersects the aggregate demand (AD) curve. At this point, the quantity of output produced and the price level are both determined. In the short-run, the SRAS curve is assumed to be upward sloping, so an increase in demand will lead to an increase in output and prices, while a decrease in demand will lead to a decrease in output and prices.

A Short-Run Equilibrium Occurs