In the AD-AS framework,long-run equilibrium implies that ________.
A)quantity demanded equals quantity supplied at a moderate level of equilibrium inflation
B)quantity demanded equals quantity supplied at a point consistent with the short-run equilibrium level of inflation
C)quantity demanded equals quantity supplied at a point consistent with the natural rate of unemployment
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

Long-run equilibrium in the AD-AS framework occurs when the economy is at the natural rate of unemployment, which means that the quantity of real GDP demanded is equal to the quantity of real GDP supplied at potential output with no upward or downward pressure on the price level. Therefore, choice C is the correct answer. Choices A and B are related to short-run equilibrium, while choice D includes all three options, which is not correct. Choice E is not correct because there must be a long-run equilibrium in the AD-AS framework.

In the AD-AS Framework,long-Run Equilibrium Implies That ________