The Economy Is in Both a Short- and Long-Run Equilibrium

question 15

Multiple Choice

The economy is in both a short- and long-run equilibrium if:

• A) current inflation equals expected inflation and current output equals potential output.
• B) the aggregate demand curve intersects the short-run aggregate supply curve.
• C) the long-run aggregate supply curve is at potential output.
• D) the short-run aggregate supply curve intersects the long-run aggregate supply curve at potential output.

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Definitions:

Marginal Cost

The charge for producing another unit of a good or service.

Demand Curve

An illustrative chart that depicts how the demand for a product varies with changes in its price.

Total Costs

The overall expenditure on the production of goods or services, covering both fixed and variable costs.

Flight Capacity

The maximum number of passengers or the amount of cargo that an airline can transport in a given period.