Use the following to answer questions .
Exhibit: Long-run Equilibrium
-(Exhibit: Long-run Equilibrium) The potential output in this economy is
A) $6,000 billion at a price level of 1.08.
B) $7,000 billion at a price level of 1.12.
C) $7, 100 billion at a price level of 1.16.
D) $7,056 billion at a price level of 1.08.

Question

Use the following to answer questions .
Exhibit: Long-run Equilibrium 
-(Exhibit: Long-run Equilibrium) The potential output in this economy is
A) $6,000 billion at a price level of 1.08. 
B) $7,000 billion at a price level of 1.12. 
C) $7, 100 billion at a price level of 1.16. 
D) $7,056 billion at a price level of 1.08.

Quizplus · Accepted Answer

In long-run equilibrium, the economy's output is at its potential level, which is typically where the aggregate supply and aggregate demand curves intersect at the natural level of output. Here, $7,000 billion at a price level of 1.12 is likely the potential output.

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