When the economy is in long-run equilibrium, the price level adjusts so as to equate which two values with one another?
A) import and export spending
B) the inflation rate and the unemployment rate
C) government spending and tax revenues
D) total planned real expenditures and total planned production

Question

Quizplus · Accepted Answer

In long-run equilibrium, total planned real expenditures (aggregate demand) are equal to total planned production (aggregate supply). The price level adjusts so that these two values are equal, ensuring that the economy is producing at its potential output level. Options A, B, and C do not represent the equilibrium condition in the economy.

When the Economy Is in Long-Run Equilibrium, the Price Level