Long-Run Macroeconomic Equilibrium Occurs When

question 257

Multiple Choice

Long-run macroeconomic equilibrium occurs when

• A)aggregate demand equals short-run aggregate supply.
• B)aggregate demand equals short-run aggregate supply and they intersect at a point on the long-run aggregate supply curve.
• C)structural and frictional unemployment equals zero.
• D)output is above potential GDP.

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Definitions:

Long-Run Equilibrium

A state in which all factors of production and costs are variable, and firms in the market are making zero economic profit, indicating no incentive for entry or exit from the market.

Price Levels

An aggregate average of current prices for goods and services in the economic sector.

Output Levels

The total amount of goods or services produced by a company or country within a specific period.

Aggregate Demand Curve

A graphical representation showing the total demand for goods and services within an economy at different price levels.