The current equilibrium price level and output level respectively are: 100 and $9 trillion.

Question

The current equilibrium price level and output level respectively are: 100 and $9 trillion.

The full employment level of GDP is
A. $9 trillion now but it depends on the SRAS curve.
B. $9 trillion now but thereafter it depends on what the aggregate demand curve does.
C. unknown since no information was provided about the labor market.
D. $9 trillion since the LRAS is defined at this point

Answer 1

D. $9 trillion since the LRAS is defined at this point. The full employment level is determined by the economy's production capacity in the long run, which is represented by the Long-Run Aggregate Supply (LRAS) curve. Therefore, if the current output level is at the full employment level, then the LRAS must intersect the aggregate demand curve at the current equilibrium price level of $100 and output level of $9 trillion.

Answer 2

The current equilibrium price level and output level respectively​ are: 100 and ​$9 trillion.

D. $9 trillion since the LRAS is defined at this point

The current equilibrium price level and output level respectively are: 100 and $9 trillion.