Long-run aggregate supply curve corresponds to
A) real GDP when the economy is above full employment.
B) real GDP when the economy is at full employment.
C) the economy outside its production possibilities curve.
D) the economy inside its production possibilities curve.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve represents the potential output of an economy when all factors of production are used efficiently, which only occurs when the economy is at full employment. Therefore, the real GDP at full employment corresponds to the long-run aggregate supply curve.

Long-Run Aggregate Supply Curve Corresponds to