Which of the following statements is true about the economy in the long run?
A)Equilibrium output must be below potential GDP and the rate of unemployment must exceed the natural rate.
B)Production costs are close to zero.
C)The rate of unemployment is zero in the long run.
D)The aggregate demand curve plays no role in determining the equilibrium level of real GDP.
E)The aggregate supply curve is a horizontal line.

Question

Quizplus · Accepted Answer

In the long run, the aggregate supply curve is vertical, indicating that the economy is at full employment and potential GDP. The aggregate demand curve does not determine the equilibrium level of real GDP in the long run, as it is determined by the economy's productive capacity.

Which of the Following Statements Is True About the Economy