The economy is in both a short- and long-run equilibrium if:
A) current inflation equals expected inflation and current output equals potential output.
B) the aggregate demand curve intersects the short-run aggregate supply curve.
C) the long-run aggregate supply curve is at potential output.
D) the short-run aggregate supply curve intersects the long-run aggregate supply curve at potential output.

Question

Quizplus · Accepted Answer

In both short- and long-run equilibrium, current inflation equals expected inflation, and current output equals potential output, indicating no output gap and stable inflation expectations.

The Economy Is in Both a Short- and Long-Run Equilibrium