The long-run aggregate supply curve at potential national income is analogous to:
A)the short-run aggregate demand curve at potential national income.
B)the long-run Phillips curve at the natural rate of unemployment.
C)the long-run aggregate demand curve at each price level.
D)the short-run Phillips curve at the natural rate of unemployment.
E)the horizontal portion of the Phillips curve.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve at potential national income represents the level of output that an economy can produce when all factors of production are utilized at their normal rates. This is equivalent to the long-run Phillips curve at the natural rate of unemployment, which represents the rate of unemployment that is consistent with stable inflation in the long run. The other options do not accurately describe the LRAS curve.

The Long-Run Aggregate Supply Curve at Potential National Income Is