Which of the following statements is true of the economy in the long run?
1. real GDP eventually moves to potential because all wages and prices are assumed to be flexible.
2. the economy can achieve its natural level of employment and potential output at any price level.
3. there is no cyclical unemployment.
A. I only
B. I and II only
C. I and III only
D. I, II, and III
Ans: D. I, II, and III
You might also like to view...
If the growth of the quantity of money is 5 percent per year, potential and real GDP grow at 3 percent per year, and velocity does not change, in the long run what is the inflation rate?
What will be an ideal response?
Which phrase(s) is (are) associated with normative statements?
a. c and e. b. Has been shown. c. Should be. d. Can be. e. More than.
According to the law of supply, the quantity supplied is _____ related to price, other things constant.
A) inversely B) negatively C) directly D) indirectly E) never
One of the problems created by price floors is that
a. consumers complain about high prices b. firms have no incentives to reduce cost c. excess supply is created d. people must learn to cope with excess demand e. technological change is significantly impacted