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:

Social Comparison

The process of evaluating oneself by comparison with others, which can influence self-esteem and personal development.

Sensitivity

The quality of being easily influenced, changed, or damaged, especially by external factors or conditions.

Industry

The sector of an economy involved in the production of goods and services.

Inferiority

A feeling of lower standing in relation to others, which can affect an individual's self-esteem and social interactions.