11.5 The Long-Run AS Curve
Refer to the information provided in Figure 11.7 below to answer the questions that follow. Figure 11.7
-Refer to Figure 11.7. The level of aggregate output that can be sustained in the long run without inflation
A) is $800 million.
B) is $700 million.
C) is $400 million.
D) cannot be determined from this information because aggregate demand is not given.

Question

11.5 The Long-Run AS Curve
Refer to the information provided in Figure 11.7 below to answer the questions that follow.  Figure 11.7
-Refer to Figure 11.7. The level of aggregate output that can be sustained in the long run without inflation
A) is $800 million. 
B) is $700 million. 
C) is $400 million. 
D) cannot be determined from this information because aggregate demand is not given.

Quizplus · Accepted Answer

The long-run AS curve represents the level of output that can be sustained without causing inflation. The intersection of the LRAS curve and the AD curve gives the equilibrium level of output. In this case, the intersection point is at $700 million of aggregate output, which means that this level can be sustained without causing inflation in the long run.

11.5 the Long-Run AS Curve