Use the figure below to answer the following question(s).
Figure 10-7

-The economy depicted in Figure 10-8 is in
A)short-run equilibrium at less than the full-employment output level.
B)short-run equilibrium at an output level beyond full employment.
C)long-run equilibrium at point a.
D)long-run equilibrium at point b.

Question

Use the figure below to answer the following question(s).
Figure 10-7
 
-The economy depicted in Figure 10-8 is in
A)short-run equilibrium at less than the full-employment output level. 
B)short-run equilibrium at an output level beyond full employment. 
C)long-run equilibrium at point a. 
D)long-run equilibrium at point b.

Quizplus · Accepted Answer

The output level in the figure is below full-employment level, indicating that there is still slack in the economy with unemployment. The economy is at a short-run equilibrium at point X, where aggregate demand intersects with short-run aggregate supply. Point Y is the potential output level or full-employment output level. Therefore, the correct answer is A, short-run equilibrium at less than the full-employment output level.

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