The long- run aggregate supply curve shows the
A) maximum GDP the nation will ever produce.
B) level of output for which real GDP equals nominal GDP.
C) level of real GDP associated with a constant price level.
D) full- employment level of real GDP.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve shows the full-employment level of real GDP, which is the level of output that can be sustained over the long run without causing inflation. It reflects the economy's potential output when all factors of production are used at their normal rates.

The Long- Run Aggregate Supply Curve Shows the