In the Basic AD/AS Model, Which of the Following Is

question 76

Multiple Choice

In the basic AD/AS model, which of the following is a defining characteristic of the adjustment process that takes the economy from the short run to the long run?

• A)factor prices are assumed to respond to output gaps
• B)firms cannot operate near their normal capacity
• C)technology used in production is endogenous
• D)the level of potential output fluctuates with the price level
• E)factor supplies are assumed to be varying

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