Which of the Following Statements Is True of the Economy

question 146

Multiple Choice

Which of the following statements is true of the economy in the long run? In the long run,
I. real GDP eventually moves to potential output because all wages and prices are assumed to be flexible.
II. the economy can achieve its natural level of employment and potential output at any price level.
III. there is no cyclical unemployment.

• A) I only
• B) I and II only
• C) I and III only
• D) I, II, and III

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Definitions:

Insurable Interest

A principle requiring that a person purchasing insurance has a vested interest in the item or life being insured.

Double Chocolate Bars

Confectionery items that incorporate chocolate in at least two forms, such as chocolate coating and chocolate filling.

Confection Corporation

A business entity specialized in the production and sale of sweets and chocolates.

Perfect Tender Rule

A common law rule under which a seller was required to deliver to the buyer goods that conformed perfectly to the requirements stipulated in the sales contract. A tender of nonconforming goods would automatically constitute a breach of contract. Under the Uniform Commercial Code, the rule has been greatly modified.