Assuming That W and R Are Both Positive,if the Long-Run

question 81

Multiple Choice

Assuming that w and r are both positive,if the long-run expansion path is horizontal,then

• A) MPK = 0.
• B) MRTS is a function of capital only.
• C) w = r.
• D) All of the above.

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Definitions:

Long-Run Equilibrium

A state in which all inputs and outputs in an economy are fully adjusted so that there is no tendency for change.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, an indicator of inflation.

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation), reflecting the real value of goods and services produced.

Short-Run Economic Recession

A brief period of economic decline characterized by reduced industrial production, trade, and lowered levels of employment.