Graphically, long-run equilibrium occurs at the intersection of the aggregate demand curve and:
A)the aggregate supply curve and potential output.
B)the planned aggregate expenditure line.
C)the aggregate supply curve.
D)potential output.

Question

Quizplus · Accepted Answer

In the long-run equilibrium, the aggregate demand curve intersects both the aggregate supply curve and the potential output, indicating that the economy is producing at its full capacity.

Graphically, Long-Run Equilibrium Occurs at the Intersection of the Aggregate