Figure 10-18 Based on Figure 10-18, when the aggregate demand curve is in the position AD₁, the economy's position of long-run equilibrium corresponds to point A) E₁. B) E₂. C) E₃. D) E₁ or E₂.

Question

Quizplus · Accepted Answer

Point E₁ is where the aggregate demand curve intersects the long-run aggregate supply curve. This signifies the long-run equilibrium of the economy. Points E₂ and E₃ correspond to short-run equilibrium points and do not indicate a stable equilibrium in the long run.

Figure 10-18 Based on Figure 10-18, When the Aggregate