When actual output equals potential output and the inflation rate is equal to the expected rate of inflation, the economy is said to be in ________ equilibrium.
A)long-run
B)recessionary
C)expansionary
D)short-run

Question

Quizplus · Accepted Answer

Long-run equilibrium a situation in which actual output equals potential output and the inflation rate is stable. Graphically, long-run equilibrium occurs when the AD curve, the SRAS line, and the LRAS line all intersect at a single point.

When Actual Output Equals Potential Output and the Inflation Rate