When the economy is producing Real GDP at the level at which the LRAS curve intersects the AD curve the economy is
A) in a recessionary gap.
B) in long-run equilibrium.
C) in an inflationary gap.
D) operating at less than full-employment output.

Question

Quizplus · Accepted Answer

When the economy is producing Real GDP at the level of intersection between the LRAS curve and the AD curve, it indicates that the economy is operating at its potential level of output and there is neither a boom nor recession in the economy. This situation is referred to as long-run equilibrium.

When the Economy Is Producing Real GDP at the Level