Within the Framework of the AD/AS Model, If a Long-Run

question 14

Multiple Choice

Within the framework of the AD/AS model, if a long-run equilibrium is present in the goods and services market,

• A) decision makers will have accurately forecast the current price level when they arrived at resource price and loanable funds agreements.
• B) the profit rates of the firms will generally exceed the competitive level.
• C) the actual rate of unemployment will fall below the natural rate of unemployment.
• D) the current rate of output will be sustainable in the future.
• E) both a and d are correct.

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Definitions:

Longitudinal

Relating to research or study that involves repeated observations of the same subjects over a period, often years or decades.

Time-lagged

Referring to studies or analyses that consider the delay between the occurrence of one event and the observation of its effects.

Cross-sectional

In research, it describes a study that observes a diverse population at a single point in time to identify potential correlations or trends.

Longitudinal

Describing research or studies that collect data from the same subjects repeatedly over a period of time.