When the level of output is such that aggregate demand equals aggregate supply,

Question

Quizplus · Accepted Answer

When aggregate demand equals aggregate supply, it means that the economy is in equilibrium, where the level of output is stable and there is neither upward nor downward pressure on prices. This does not necessarily mean that the economy is producing at full employment level of GDP, as there could be unused resources or factors of production that prevent the economy from reaching its maximum potential output.

When the Level of Output Is Such That Aggregate Demand