When an Economy Is Operating on Its Long-Run Aggregate Supply

question 85

Multiple Choice

When an economy is operating on its long-run aggregate supply curve,

• A)the actual inflation rate is greater than the anticipated inflation rate.
• B)the actual unemployment rate equals the natural unemployment rate.
• C)unemployment will fall to an unusually low rate that is not likely to last into the future.
• D)real GDP demanded exceeds real GDP supplied.
• E)inflation must be positive.

---

Definitions:

Efficiency Wage Model

A theory suggesting that higher wages lead to increased productivity by attracting higher quality workers and motivating all workers to avoid being fired.

Level of Employment

Refers to the number of people employed in the economy at any given time, influencing overall economic output.

Electronic Devices

Gadgets that operate on electrical energy, including computers, smartphones, and household appliances.

No Shirking Constraint

A concept in labor economics that suggests higher wages motivate employees to work harder, reducing shirking on the job.