The Main Difference Between the Short-Run and the Long-Run Aggregate

question 58

Multiple Choice

The main difference between the short-run and the long-run aggregate supply in the Keynesian model is

• A)in the short run prices and wages are assumed fixed,but in the long run they are assumed flexible.
• B)in the short run prices are assumed flexible but wages fixed,whereas in the long run both are assumed flexible.
• C)in the short run wages are assumed flexible but prices fixed,whereas in the long run both are assumed flexible.
• D)in the short run potential GDP is equal to actual GDP,but in the long run the former exceeds the latter.