Exhibit 14A-2 Macro AD-AS Model

-In Exhibit 14A-2,the long-run aggregate supply curve represents:
A) potential real GDP output for this economy.
B) that the economy is experiencing zero inflation.
C) that the economy is experiencing a recessionary gap.
D) the level of real GDP where the unemployment rate is zero.

Question

Exhibit 14A-2 Macro AD-AS Model
 
-In Exhibit 14A-2,the long-run aggregate supply curve represents:
A) potential real GDP output for this economy. 
B) that the economy is experiencing zero inflation. 
C) that the economy is experiencing a recessionary gap. 
D) the level of real GDP where the unemployment rate is zero.

Quizplus · Accepted Answer

The long-run aggregate supply curve represents the potential real GDP output for this economy, which is the maximum sustainable level of output that can be produced given the economy's resources and technology. It is not necessarily indicative of zero inflation, a recessionary gap, or the level of real GDP where the unemployment rate is zero.