Whenever the aggregate supply curve intercepts the aggregate demand curve, the economy is producing full employment output.

Question

Quizplus · Accepted Answer

The intersection of the aggregate supply curve and the aggregate demand curve determines the equilibrium output and price level in the economy, but it does not necessarily indicate full employment output. Full employment output is a concept related to the potential output of the economy when all resources are utilized efficiently, and it can occur at different points depending on various factors, including the position of the aggregate supply curve.

Whenever the Aggregate Supply Curve Intercepts the Aggregate Demand Curve