Which of the following is true when an economy is in long-run equilibrium?
A)Actual output can exceed potential output.
B)Potential output can exceed actual output.
C)Actual output must equal potential output.
D)Real GDP must equal nominal GDP.
E)Expected price level can exceed actual price level.

Question

Quizplus · Accepted Answer

Long-run equilibrium occurs when an economy's actual output equals potential output. This means that all resources are being used efficiently and the economy is producing at its maximum sustainable level. In this situation, there is no tendency for inflation or deflation, and prices are stable.

Which of the Following Is True When an Economy Is