Select the answer which best completes the following statement: "at any point along the long-run aggregate supply curve…"
A) expected inflation equals current inflation and current output is below potential output.
B) the economy is moving toward its potential output level.
C) current output equals potential output and expected inflation equals current inflation.
D) expected inflation is moving toward current inflation.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve represents a situation where the economy's output is at its potential level, and there is no difference between expected and current inflation. This is because, in the long run, prices and wages have adjusted to their equilibrium levels, reflecting all available information, including expectations about inflation.

Select the Answer Which Best Completes the Following Statement: "At