Which of the Following Is True of an Economy in the Long

question 7

Multiple Choice

Which of the following is true of an economy in the long run?

• A) The economy operates on its production possibility frontier.
• B) The rate of inflation is expected to be very high.
• C) Wage rates increase faster than inflation rates.
• D) There is a high level of unemployment in the economy.

---

Definitions:

Entry Barriers

Obstacles that prevent or hinder new competitors from easily entering an industry or area of business.

Collusion

An agreement between two or more parties, often in a secretive manner, to limit open competition by deceiving or defrauding others of their legal rights, or to obtain an objective forbidden by law, typically by defrauding or gaining an unfair market advantage.

Homogeneous Product

A product or service that is perceived by consumers as identical in all essential features and quality to a product or service offered by competing companies.

Differentiated Product

A product that is distinct in some way from other products in the market, often through quality, design, or features, allowing it to stand out to consumers.