Use the figure below to answer the following question(s). Figure 10-6
In the short-run equilibrium depicted in Figure 10-6, the economy's output is
A) equal to potential GDP.
B) less than potential GDP.
C) greater than potential GDP.
D) equal to the economy's full-employment output.

Question

Use the figure below to answer the following question(s). Figure 10-6
 In the short-run equilibrium depicted in Figure 10-6, the economy's output is
A) equal to potential GDP. 
B) less than potential GDP. 
C) greater than potential GDP. 
D) equal to the economy's full-employment output.

Quizplus · Accepted Answer

The short-run equilibrium is where the AD curve intersects the SRAS curve, which is to the left of the vertical LRAS line indicating potential GDP. Therefore, the economy's output is less than potential GDP.

Use the Figure Below to Answer the Following Question(s)