Figure 24-3
-Refer to Figure 24-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP.
A)A and B
B)A and C
C)C and D
D)B and D

Question

Figure 24-3 
-Refer to Figure 24-3.Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP.
A)A and B 
B)A and C 
C)C and D 
D)B and D

Quizplus · Accepted Answer

In the short run, the economy can be at an equilibrium where actual GDP is different from potential GDP (Y1). Points B and D represent such short-run equilibria where the economy is not at potential GDP, thus they are not long-run equilibria.

Figure 24-3 -Refer to Figure 24-3.Which of the Points in the Above