An Economy Is in Long- Run Equilibrium When Aggregate Supply

question 35

Multiple Choice

An economy is in long- run equilibrium when aggregate supply unexpectedly decreases.Then real GDP ceteris paribus) will be

• A)below potential GDP.
• B)above potential GDP.
• C)equal to potential GDP.
• D)either above, below, or equal to potential GDP depending on the position of the aggregate demand curve.
• E)either above or equal to potential GDP depending on the position of the aggregate demand curve.

Grasp the concept of resource allocation efficiency in the context of marginal cost and price equality.

Understand the implications of changes in industry size on resource prices and production costs.

Relate concepts of economic profits, losses, and break-even conditions to firm behavior and market adjustments.

Understand the dynamics of market demand and supply in determining product prices and total output.

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Definitions:

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