In the long run, the output level is determined by
A) aggregate demand.
B) long-run aggregate supply.
C) the government.
D) household income.

Question

Quizplus · Accepted Answer

In the long run, the output level is determined by the long-run aggregate supply. The long-run aggregate supply is determined by the factors of production, such as capital, labor, and technology, which are not affected by changes in aggregate demand or government policies. Thus, in the long run, the economy will produce at its potential output level determined by the long-run aggregate supply.

In the Long Run, the Output Level Is Determined by