When the actual GDP equals the full-employment level of GDP, the
A) economy is in long-run equilibrium.
B) price level must be rising.
C) expected inflation must be zero.
D) aggregate supply curve is not constrained by the scarcity of resources.

Question

Quizplus · Accepted Answer

When the actual GDP equals the full-employment level of GDP, all available resources in the economy are being fully utilized, resulting in a long-run equilibrium. This does not necessarily mean that the price level must be rising or that expected inflation is zero. The aggregate supply curve is also not necessarily unconstrained by the scarcity of resources.

When the Actual GDP Equals the Full-Employment Level of GDP