The SAS curve and the LAS curve
A) are perpendicular to one another at potential GDP.
B) are parallel at potential GDP.
C) intersect at potential GDP.
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

The SAS (short-run aggregate supply) curve and the LAS (long-run aggregate supply) curve intersect at potential GDP. This intersection represents the equilibrium level of output where the aggregate demand (AD) curve also intersects the SAS curve. At this point, the economy is producing at its potential level of output, meaning that all available resources are being used efficiently.

The SAS Curve and the LAS Curve