Macroeconomic equilibrium is described as the combination of
A)potential output and price level that is on both the AD curve and AS curve.
B)real GDP and price level that is on both the AD curve and AS curve.
C)all individual demand curves and potential GDP.
D)all individual demand curves and all individual supply curves.
E)real GDP and price level that is on both the AD curve and 45- degree line.

Question

Quizplus · Accepted Answer

Macroeconomic equilibrium occurs at the intersection of the aggregate demand (AD) curve and the aggregate supply (AS) curve. At this point, the price level and real GDP are both on both the AD and AS curves, indicating that the economy is producing at its potential output and prices are stable. Therefore, B is the best choice that describes macroeconomic equilibrium.

Macroeconomic Equilibrium Is Described as the Combination of