The figure given below represents the equilibrium real GDP and price level in the aggregate demand and aggregate supply model. Figure 8.3 Refer to Figure 8.3.If AS₁ and AD₁ represent the initial aggregate demand and supply in the economy, the long-run equilibrium real GDP will be _____ billion. A)$100 B)$200 C)$300 D)$400 E)$500

Question

Quizplus · Accepted Answer

The long-run equilibrium in the AD-AS model occurs where the AD curve intersects the LRAS curve. In the given figure, the LRAS curve intersects the AD curve at a real GDP of $300 billion. Therefore, the correct answer is (C) $300 billion.

The Figure Given Below Represents the Equilibrium Real GDP and Price