When the economy is operating at a point where aggregate demand equals long-run aggregate supply, it must be true that:
A) aggregate demand also equals short-run aggregate supply.
B) the economy is in long-run equilibrium.
C) prices and expected prices are the same.
D) All of these are true.

Question

Quizplus · Accepted Answer

When aggregate demand equals long-run aggregate supply, the economy is in long-run equilibrium, which implies that aggregate demand also equals short-run aggregate supply, and prices are equal to expected prices.

When the Economy Is Operating at a Point Where Aggregate