As shown in Exhibit 1, the economy's point of short-run equilibrium, given by the shift of the aggregate demand curve from AD₁ to AD₂, is: A)E₁. B)E₂. C)E₃. D)unable to be determined.

Question

Quizplus · Accepted Answer

The short-run equilibrium occurs where the new aggregate demand curve (AD2) intersects the short-run aggregate supply curve, which is typically represented by E2 in such diagrams.

As Shown in Exhibit 1, the Economy's Point of Short-Run