If the economy is represented in the graph shown and is currently at point E₁, 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

The economy is at point E₁, which represents the intersection of the long-run aggregate supply (LAS) curve, the short-run aggregate supply (SAS) curve, and the aggregate demand (AD) curve. This point indicates that the economy has reached a long-run equilibrium, where there is full employment and potential output. Therefore, the correct answer is A) long-run equilibrium.

If the Economy Is Represented in the Graph Shown and Is