When AD Is Equal to SRAS at an Output Level

question 81

Multiple Choice

When AD is equal to SRAS at an output level equal to the LRAS curve,

• A)we are at long-run macroeconomic equilibrium.
• B)we are at the natural rate of unemployment.
• C)both a and b are true.
• D)neither a nor b is true.

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Definitions:

Equilibrium Wage Rate

The wage rate at which the quantity of labor supplied is equal to the quantity of labor demanded in the market.

Minimum Wage Rate

The lowest legally allowed hourly payment for workers, established to ensure a minimum standard of living for employees.

Economic Rent

Income earned from the use of a resource that is in fixed supply; a payment to a factor of production in excess of the cost needed to bring that factor into production.

Nominal

Referring to a value expressed in current prices, without adjustment for inflation, as opposed to real values which are adjusted for inflation.