The position of the long-run aggregate supply curve corresponds to the economy's:
A) full-employment real GDP.
B) maximum possible level of employment.
C) natural level of personal consumption expenditure.
D) maximum possible level of personal consumption expenditures.

Question

The position of the long-run aggregate supply curve corresponds to the economy's:
A) full-employment real GDP.
B) maximum possible level of employment.
C)   natural level of personal consumption expenditure.
D) maximum possible level of personal consumption expenditures.

Quizplus · Accepted Answer

The long-run aggregate supply curve represents the economy's full-employment equilibrium level of real GDP, which is the level of output produced when all factors of production (including labor) are utilized at their natural rates of utilization. Therefore, choice A is the best answer.

The Position of the Long-Run Aggregate Supply Curve Corresponds to the Economy's