Exhibit 14-6 Aggregate supply curve

In Exhibit 14-6, where the GDP = $1,200 billion,
A) everyone in the population over 16 years of age is working.
B) the economy has reached the full-employment level of real GDP .
C) GDP can increase to $1,100 billion without triggering an increase in the price level.
D) no further increases in the price level can generate more real GDP.

Question

Exhibit 14-6 Aggregate supply curve
 
In Exhibit 14-6, where the GDP = $1,200 billion,
A) everyone in the population over 16 years of age is working. 
B) the economy has reached the full-employment level of real GDP . 
C) GDP can increase to $1,100 billion without triggering an increase in the price level. 
D) no further increases in the price level can generate more real GDP.

Quizplus · Accepted Answer

At GDP = $1,200 billion, the aggregate supply curve intersects the vertical long-run aggregate supply (LRAS) curve, indicating that the economy has reached the full-employment level of real GDP where all available resources are being utilized efficiently.

Exhibit 14-6 Aggregate Supply Curve