Question

When does equilibrium occur in the long-run ?

Answer 1

Answer:

If current real GDP is less than full employment output, an economy is in a recession. If current real GDP is higher than full employment output, an economy is experiencing a boom. If the current output is equal to the full employment output, then we say that the economy is in long-run equilibrium. In long run equilibrium, the aggregate supply curve is a vertical line at the potential output level of 50.