-The economy pictured in the diagram above is in short-run equilibrium with the combination of inflation and output indicated by point ________.The long-run equilibrium combination of inflation and output for this economy is indicated by point ________.
A) A;B
B) A;C
C) B;A
D) B;C
E) C;A

Question

-The economy pictured in the diagram above is in short-run equilibrium with the combination of inflation and output indicated by point ________.The long-run equilibrium combination of inflation and output for this economy is indicated by point ________.
A) A;B 
B) A;C 
C) B;A 
D) B;C 
E) C;A

Quizplus · Accepted Answer

In the short-run, the economy can be at a point where inflation and output are not at their natural levels, such as point A. In the long-run, the economy tends to move towards its natural levels of inflation and output, which is indicated by point C.

-The Economy Pictured in the Diagram Above Is in Short-Run