When Economists State That in the Long Run Prices Are

question 79

Multiple Choice

When economists state that in the long run prices are flexible they mean that

• A)inflation must be zero in the long run.
• B)in the long run, firms adjust their prices to reflect changes in cost or demand.
• C)changes in the nominal money supply have greater impact on the level of economic activity in the long run than in the short run.
• D)a one-time increase in the money supply will affect output only in the long run.

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