In long-run equilibrium,
A)actual output can exceed potential output
B)potential output can exceed actual output
C)actual output must equal potential output
D)actual price levels can exceed expected price levels
E)expected price levels can exceed actual price levels

Question

Quizplus · Accepted Answer

In long-run equilibrium, the economy is operating at its potential output level, which is the maximum sustainable output level given the available resources and technology. Therefore, actual output must equal potential output to achieve this equilibrium. Answers A, B, D, and E are incorrect because they refer to situations that are inconsistent with long-run equilibrium.

In Long-Run Equilibrium