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Figure: Short- and Long-Run Equilibrium
-(Figure: Short- and Long-Run Equilibrium) Look at the figure Short- and Long-Run Equilibrium. If the economy is at equilibrium at E₁, it is in a(n) :

Question

Use the following to answer questions :
Figure: Short- and Long-Run Equilibrium

-(Figure: Short- and Long-Run Equilibrium) Look at the figure Short- and Long-Run Equilibrium. If the economy is at equilibrium at E₁, it is in a(n) :

Quizplus · Accepted Answer

The economy is in a recessionary gap because the equilibrium output (Y1) is less than the potential output (Yp), indicating that there is lower than normal economic activity and high levels of unemployment.

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