The table below shows data for five economies of similar size.Real GDP is measured in billions of dollars.Assume that potential output for each economy is $340 billion. TABLE 24-1 Refer to Table 24-1.Which of the economies is operating at its long-run equilibrium?
A)Economy A
B)Economy B
C)Economy C
D)Economy D
E)Economy E

Question

The table below shows data for five economies of similar size.Real GDP is measured in billions of dollars.Assume that potential output for each economy is $340 billion.  TABLE 24-1 Refer to Table 24-1.Which of the economies is operating at its long-run equilibrium?
A)Economy A 
B)Economy B 
C)Economy C 
D)Economy D 
E)Economy E

Quizplus · Accepted Answer

Long-run equilibrium occurs when real GDP equals potential output. In this case, potential output is $340 billion for all economies. Economy C is the only economy where real GDP equals potential output, making it the only economy currently operating at its long-run equilibrium. The other economies are either experiencing a recessionary gap (output below potential) or an inflationary gap (output above potential).

The Table Below Shows Data for Five Economies of Similar