The full employment level of real GDP can be represented on an aggregate supply and demand diagram as a(n):
A) vertical line.
B) upward-sloping line.
C) horizontal line.
D) downward-sloping line.

Question

Quizplus · Accepted Answer

The full employment level of real GDP is represented as a vertical line on an aggregate supply and demand diagram because it reflects a point where the economy is producing at its maximum sustainable output level, beyond which inflation would increase.

The Full Employment Level of Real GDP Can Be Represented