Following Johnston's recent public apology, in which he admits he "said things about the Palins that were not completely true," Bristol, 19, tells PEOPLE in its new issue, "I forgive him for what he did. He was young, mad, misguided. We're moving on."
Amid reports that the two are planning to tie the knot – a move they reputedly have yet to run by her parents – Bristol, who did not wear an engagement ring during her conversation with PEOPLE, replied to the question of if they would marry: "Yeah. I mean, I don't really want to get into detail about what's in store for our future, because who knows? But all I'd like to say about it is, hopefully we will be a family."
As for how they managed to bury the hatchet after their very public falling out, Bristol credits Levi's "just coming around. But, I don't know. It's good. It's good for all three of us [including son] Tripp Easton!"
Looking back, Bristol believes that if fame, money and her mom Sarah Palin's vice presidential campaign had not become part of her and Levi's lives, the ex-couple would already be happy living a simple life.
"I think Levi and I would be married," she says without hesitation. "He would still have his [oil] job on the North Slope, and we'd be in a one-bedroom apartment, scraping by."
Bristol, who says all of her friends have gone out of state, has no plans to follow them. "Levi and I are both Alaska based, and I don't see us moving anywhere else."
Reporting by SANDRA SOBIERAJ WESTFALL
For much more on Bristol Palin, pick up this week's issue of PEOPLE, on newsstands Friday