The aggregate demand and aggregate supply curve intersect
A)at potential GDP.
B)below potential GDP.
C)above potential GDP.
D)at a point which may or may not be equal to potential GDP.

Question

Quizplus · Accepted Answer

The intersection of the aggregate demand and aggregate supply curve determines the economy's equilibrium level of output and price level at a particular time. This point may be at, above, or below potential GDP, depending on various economic factors such as fiscal policy, monetary policy, and external economic conditions.

The Aggregate Demand and Aggregate Supply Curve Intersect