In the aggregate demand/aggregate supply model,long-run equilibrium occurs at the combination of output and prices where:
A) aggregate demand equals long-run aggregate supply.
B) aggregate demand equals short-run aggregate supply.
C) aggregate demand equals short-run and long-run aggregate supply.
D) short-run aggregate supply equals long-run aggregate supply.

Question

Quizplus · Accepted Answer

In the long-run equilibrium of the aggregate demand/aggregate supply model, aggregate demand equals both short-run and long-run aggregate supply, indicating that the economy is producing at its full potential output level.

In the Aggregate Demand/aggregate Supply Model,long-Run Equilibrium Occurs at the Combination