The output level at which the aggregate demand curve intersects the aggregate supply is always the level at which
A)Saving is zero.
B)Macro equilibrium is achieved.
C)Full employment is sustainable by the economy.
D)Micro equilibrium is achieved.

Question

Quizplus · Accepted Answer

The intersection point of the aggregate demand curve and aggregate supply curve represents the level of macroeconomic equilibrium in the economy. At this level of output, the total quantity of goods and services demanded in the economy is equal to the total quantity of goods and services supplied by the firms in the economy. This suggests that there is no excess supply or excess demand in the market, which represents the state of equilibrium. Therefore, option B is the correct answer. Options A, C, and D are incorrect as they do not accurately describe the state of the economy when macro equilibrium is achieved.

The Output Level at Which the Aggregate Demand Curve Intersects