Use the following to answer questions .
Exhibit: Monetary Policy and Long-Run Aggregate Demand and Aggregate Supply
-(Exhibit: Monetary Policy and Long-Run Aggregate Demand and Aggregate Supply) If the economy is at point a,
A) employment is greater than the natural level of employment.
B) it is at the natural level of employment.
C) it is in a recessionary gap.
D) the unemployment rate is negative.

Question

Use the following to answer questions .
Exhibit: Monetary Policy and Long-Run Aggregate Demand and Aggregate Supply 
-(Exhibit: Monetary Policy and Long-Run Aggregate Demand and Aggregate Supply) If the economy is at point a,
A) employment is greater than the natural level of employment. 
B) it is at the natural level of employment. 
C) it is in a recessionary gap. 
D) the unemployment rate is negative.

Quizplus · Accepted Answer

Point A represents the intersection of the long-run aggregate supply (LRAS) and aggregate demand (AD) curves at the potential level of output, which is the natural level of employment. Therefore, the economy is operating at the natural level of employment at point A.

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