The equilibrium level of GDP always coincides with the full-employment GDP.

Question

Quizplus · Accepted Answer

The equilibrium level of GDP and full-employment GDP are not the same thing. The equilibrium level of GDP represents the level at which aggregate demand and aggregate supply are equal, while full-employment GDP represents the level of output that occurs when all available factors of production are employed at their highest sustainable rate. It is possible for the economy to operate below full-employment while still reaching its equilibrium level of GDP.

The Equilibrium Level of GDP Always Coincides with the Full-Employment