If the economy is represented in the graph shown and is currently at point E₃, then the economy must be in: A) long-run equilibrium. B) a recession. C) an economic boom. D) an economic recovery.

Question

Quizplus · Accepted Answer

Point E₃ represents long-run equilibrium, as it is where the aggregate supply and aggregate demand curves intersect at the potential output level. This means that in the long run, the economy is producing at its maximum capacity and there is no pressure on prices to rise or fall.

If the Economy Is Represented in the Graph Shown and Is