Which of the following is true about the equilibrium real output in the aggregate demand-aggregate supply (AD-AS) model in the short run?
Equilibrium real output can be above, equal to, or below full employment.
Correct. Short-run equilibrium in the (AD-AS) model occurs when the aggregate demand and short-run aggregate supply curves intersect. This can occur below, above or at the long-run aggregate supply curve. Therefore equilibrium real output can be below, above, or at full employment in the short run.
