-The reason that it is possible for the economy in the above figure to be at equilibrium point E? rather than at equilibrium point E? is that
A) in the long run there is always less than full employment.
B) in the short run the economy can produce more than it can in a long-run situation.
C) AD always shifts rightward and never shifts leftward.
D) the economy must be in a recession.

Question

-The reason that it is possible for the economy in the above figure to be at equilibrium point E? rather than at equilibrium point E? is that
A) in the long run there is always less than full employment. 
B) in the short run the economy can produce more than it can in a long-run situation. 
C) AD always shifts rightward and never shifts leftward. 
D) the economy must be in a recession.

Quizplus · Accepted Answer

In the short run, an economy can indeed produce more than its long-run potential due to factors like overtime work and the utilization of underused resources. This can temporarily push the economy beyond its long-run equilibrium, explaining why it might be at a higher output level in the short run compared to the long run.

-The Reason That It Is Possible for the Economy in the Above