2.4.3 - Equilibrium Levels Of Real National Output

Question 1

Where Does Macroeconomic Equilibrium Occur?

Answer 1

Where AD=AS.

Question 2

What Do Classical Economists Believe With Regards To Macroeconomic Equilibrium?
(2 Points)

Answer 2

~ SR -> AD = SRAS, but does not equal LRAS.

~ LR -> AD = SRAS = LRAS.

Question 3

What Do Keynesian Economists Believe With Regards To Macroeconomic Equilibrium?

Answer 3

Wherever AD = LRAS could be long run equilibrium.