The long-run aggregate supply curve can be thought of as the
A) level of output that the nation is currently producing.
B) full-employment level of real GDP.
C) level of real GDP associated with a constant price level.
D) level of output for which real GDP equals nominal GDP.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve shows the full-employment level of real GDP, which is the maximum sustainable level of output that can be produced using all available resources without causing inflationary pressures in the economy. It is not directly related to the current level of output, the price level, or the relationship between real and nominal GDP.

The Long-Run Aggregate Supply Curve Can Be Thought of as the