Exhibit 14-6 Aggregate supply curve

In Exhibit 14-6, the economy's employment potential is fully exhausted at:

Question

Exhibit 14-6 Aggregate supply curve

In Exhibit 14-6, the economy's employment potential is fully exhausted at:

Quizplus · Accepted Answer

The point where the aggregate supply curve intersects the vertical axis (potential GDP) represents the maximum output that can be produced with the available resources and technology in the economy. In Exhibit 14-6, this occurs at GDP = $1,200 billion, as the aggregate supply curve becomes vertical at this point, indicating that the economy's employment potential is fully exhausted.

Exhibit 14-6 Aggregate Supply Curve