In long run equilibrium, what is produced?

In long-run equilibrium, the economy operates at its potential output, which is the highest level of output that can be sustained over time without increasing inflation. Potential output represents the maximum productive capacity of the economy, aligned with full employment where all resources, including labor and capital, are fully utilized efficiently.

Factors such as technology, labor supply, and capital stock determine this level of potential output. At this point, the economy is not experiencing recessionary or inflationary pressures; aggregate demand equals aggregate supply, ensuring that resources are allocated efficiently.

This context highlights the necessity of understanding potential output as a key concept in macroeconomics. It establishes a baseline for evaluating economic performance and informs policymakers regarding the state of the economy. In contrast to other choices, the correct answer emphasizes that long-run equilibrium is associated with strength and sustainability within the economy, avoiding scenarios of underproduction or overproduction that can lead to imbalances.