Macro equilibrium always occurs when
A)Aggregate supply is greater than aggregate demand.
B)The labor force is fully employed.
C)Aggregate demand equals aggregate supply at a given average price level.
D)The level of output is expanding.

Question

Quizplus · Accepted Answer

Macro equilibrium occurs when aggregate demand equals aggregate supply at a given price level. This means that the economy is producing the amount of goods and services that consumers and businesses want to buy, and there is no excess supply or demand. This point is often referred to as the "full employment equilibrium" because it assumes that all resources are being used efficiently, including the labor force. The level of output expanding (Option D) is not necessarily indicative of macro equilibrium, as it could be due to an increase in aggregate demand without a corresponding increase in aggregate supply.

Macro Equilibrium Always Occurs When