A long run equilibrium occurs at the intersection of the short-run aggregate supply curve and the
A)long-run aggregate supply curve.
B)Phillips curve.
C)planned aggregate expenditure curve.
D)investment demand curve

Question

Quizplus · Accepted Answer

The long run equilibrium occurs at the intersection of the short-run aggregate supply curve and the long-run aggregate supply curve because in the long-run, prices and wages are flexible and adjustments have taken place so that the economy is operating at its potential output level. This intersection is also known as the natural rate of output, and it represents the point where the economy is in equilibrium, with no excess supply or excess demand in the labor or product markets.

A Long Run Equilibrium Occurs at the Intersection of the Short-Run