The Macroeconomy Is Said to Be in Long-Run Equilibrium Only

question 141

Multiple Choice

The macroeconomy is said to be in long-run equilibrium only if

• A) the resource, loanable funds, foreign exchange, and goods and services markets are all in equilibrium.
• B) prices were incorrectly estimated by decision makers.
• C) the output of the economy exceeds the full-employment level of output.
• D) the economy is operating along its short-run aggregate supply curve.

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Definitions:

High-End

Products or services that are considered to be of the highest quality and price within their category.

Efficiency-Wage Theories

Economic theories that suggest higher wages can increase worker productivity and efficiency, thereby justifying above-equilibrium wage rates.

Equilibrium Wage

The wage rate at which the quantity of labor supplied equals the quantity of labor demanded, resulting in a stable employment situation without surpluses or shortages.

Efficiency Wage

is the concept that paying workers a higher wage than the market equilibrium can lead to higher productivity and efficiency, incentivizing better performance and loyalty.