When a Country Is in Equilibrium on Its Long-Run Aggregate

question 27

Multiple Choice

When a country is in equilibrium on its long-run aggregate supply curve, the actual price level facing economic agents

• A) is greater than the price level expected by economic agents.
• B) is equal to the price level expected by economic agents.
• C) is less than the price level expected by economic agents.
• D) is greater than, equal to, or less than the price level expected by economic agents - Cannot be determined without more information.

---

Definitions:

Aggregate Demand

The total demand for all goods and services within a country's economy at a given overall price level and in a given time period.

Aggregate Supply

The total supply of goods and services that firms in an economy plan to sell during a specific time period at various price levels.

Keynesian Range

A segment of the Keynesian theory where demand-pull inflation is unlikely to occur due to high levels of unemployment and underused resources.

Intermediate Range

The range within which all intermediate goods, price levels, and outputs are determined by a mix of supply and demand.