Short-run macroeconomic equilibrium occurs when

Question

Quizplus · Accepted Answer

Short-run macroeconomic equilibrium occurs when aggregate demand and short-run aggregate supply intersect, meaning that the quantity demanded equals the quantity supplied at a particular price level. This may occur below, above, or at potential output, but it represents a temporary balance in the economy in the short run. The other choices are incorrect: B is referring to long-run equilibrium, which occurs when aggregate demand equals potential output and the price level adjusts to clear the labor market, while C is not necessarily true, as the price level can fluctuate in the short run due to shifts in aggregate demand or supply. Finally, D is incorrect because the equilibrium may not lie on the long-run supply curve in the short run, depending on the state of the economy.

Short-Run Macroeconomic Equilibrium Occurs When