Long-run macroeconomic equilibrium occurs when the aggregate demand curve ________ the short-run aggregate supply curve,and they ________ the long-run supply curve.
A)intersects; intersect at a point to the right of
B)intersects; intersect at a point on
C)is steeper than; intersect at a point to the left of
D)is flatter than; intersect at a point to the right of

Question

Quizplus · Accepted Answer

Long-run macroeconomic equilibrium occurs when the economy is operating at the potential GDP, which is determined by the factors of production and technology. In the long run, the aggregate demand curve intersects the long-run supply curve at the potential GDP level. In the short run, prices and wages are sticky, so the short-run aggregate supply curve is upward sloping. Therefore, long-run equilibrium occurs when the aggregate demand curve intersects the short-run aggregate supply curve at a point on the long-run supply curve. Choice (B) is the only option that accurately represents this concept.

Long-Run Macroeconomic Equilibrium Occurs When the Aggregate Demand Curve ________