One Major Difference Between the Short-Run and Long-Run Macroeconomic Analysis

question 24

Multiple Choice

One major difference between the short-run and long-run macroeconomic analysis is that:

• A)in the short-run prices are fully flexible while in long-run they are not.
• B)in the short-run prices are sticky while in long-run they are fully flexible.
• C)in the short-run stickiness of prices would guarantee the long-run price inflexibility.
• D)the price stickiness in the long-run guarantees the flexibility of prices in the short-run.

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Definitions:

Perpetual Inventory System

The perpetual inventory system is a method of accounting for inventory that records sales and purchases instantly through computer systems, maintaining continuous balance updates.

LIFO

LIFO (Last In, First Out) is an inventory valuation method where the most recently produced or acquired items are the first to be expensed.

Cost of Goods Sold

Expenses directly related to manufacturing the products a company sells, involving costs of materials and labor.

Perpetual Inventory System

An inventory management system that keeps continuous, real-time records of goods as they are received and sold.