The intersection of an economy's aggregate demand and long-run aggregate supply curves: (A) Occurs at high levels of cyclical unemployment (B) Occurs at the economy's potential output (C) Determines its equilibrium real GDP in both the long run and the short run (D) Determines its equilibrium price level in both the long run and short run

(B) Occurs at the economy's potential output

Explanation:

The long run supply curve explains that in what quantity or level output the firms produced to the price level in Long Run. We could say that the natural level of employment not any type of unemployment and the potential output may be achieved during long run period. Using these, the long run aggregate supply curve appears. If long run aggregate supply curve and aggregate demand intersects, it will mean that long run equilibrium is taking place. More deeply, it considers the equilibrium real GDP and price levels in long run not in short run. Conversely, in the short run, the economy will see the lacks operating at its potential output levels.

Now, we can determine the trueness of the variants on the question:

A) Occurs at high levels of cyclical unemployment - absolutely no, because in long run, the natural level of employment will be achieved if the intersection happens.

B) Occurs at the economy's potential output - of course yes, because we saw that the equilibrium output will happen and makes its potential output.

C) Determines its equilibrium real GDP in both the long run and the short run - surely no, because the equilibrium real GDP will happen only in long term not in short term.

D) Determines its equilibrium price level in both the long run and short run - again no and the same things about the price levels because the equilibrium level will happen only in long term not in short term.