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

Question

Quizplus · Accepted Answer

Long-run macroeconomic equilibrium occurs when aggregate demand equals short-run aggregate supply and they intersect at a point on the long-run supply curve, which represents the natural rate of output. At this point, there is no pressure for prices or wages to change, and the economy operates at its full potential output level in the long run. Choices A, C, D, and E all imply that there is an imbalance in the economy, either with excess demand or supply, which would lead to changes in prices and/or output in the short run, and would not represent long-run equilibrium.

Long-Run Macroeconomic Equilibrium Occurs When Aggregate Demand ________ Short-Run Aggregate