In Long-Run Macroeconomic Equilibrium

question 26

Multiple Choice

In long-run macroeconomic equilibrium

• A) real GDP equals potential GDP.
• B) the price level is fixed and aggregate demand determines real GDP.
• C) real GDP and the price level are determined by short-run aggregate supply and aggregate demand, while long-run aggregate supply is irrelevant.
• D) real GDP is less than potential GDP.

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Definitions:

Widgets

Widgets are hypothetical, often simplified products or units used in economic and financial explanations and problems.

Total Revenues

The total money received by a company for goods sold or services provided during a certain time period.

Total Costs

The total amount of money spent on producing goods or services, encompassing both constant and fluctuating expenses.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is not achievable.