Full Employment and LRAS

Full Employment - FE Equilibrium exists where AD intersects SRAS and LRAS at the same point

Recessionary Gap - Exists when equilibrium occurs below full employment output, AD increases

Inflationary Gap - Exists when equilibrium occurs beyond FE output, AD increases

u - Stands for unemployment
pi - Inflation

LRAS - Vertical line at an output level that represents the quantity of goods and services a nation can produce over sustained period using all of its productive resources as efficiently as possible with all of the current tech available to it 

• Stable at full employment 
• LRAS curve represents a point on an economy's PPC 
• Synonymous with PPF curving outward (change in resource, tech, economic growth)
• Doesn't change as price level changes