In economic terms, equilibrium refers to a state of the economy
A)from which there is no tendency to deviate from; a state of rest.
B)when it is at the upper or lower turning point of the business cycle.
C)when there are both high unemployment and inflation.
D)when markets fail to clear.

Question

Quizplus · Accepted Answer

Equilibrium refers to a state where there is a balance between supply and demand, and there is no tendency for prices or quantities to change. It is a state of rest where markets are functioning efficiently. Choice B is incorrect as equilibrium can exist at any point in the business cycle. Choice C is incorrect as high unemployment and inflation indicate a disequilibrium state. Choice D is incorrect as markets in equilibrium are functioning properly, and all goods and services are being sold at their optimal price and quantity.

In Economic Terms, Equilibrium Refers to a State of the Economy