Which of the Following Will Always Be True When an Economy

question 127

Multiple Choice

Which of the following will always be true when an economy is in long-run equilibrium?

• A) The level of prices will be constant (that is, inflation will be zero).
• B) Actual output will exceed the potential output.
• C) The actual rate of unemployment will be less than the natural rate of unemployment.
• D) The output of the economy will correspond with the full-employment output.

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Definitions:

Jointly Exhaustive

This term refers to a set of possibilities or conditions that completely covers all potential outcomes or scenarios, leaving no option unaccounted for.

Abstract

Existing in thought or as an idea but not having a physical or concrete existence.

Concepts

Cognitive units of meaning that are abstract, generalized ideas or categories representing objects, qualities, or relations.

Referents

Objects or concepts in the world that words or phrases stand for or represent in language and thought.