At a Short-Run Equilibrium ________, While at a Long-Run Equilibrium

question 36

Multiple Choice

At a short-run equilibrium ________, while at a long-run equilibrium ________.

• A)output is at a level consistent with inflation; there is an output gap
• B)output equals potential output; the inflation rate is stable
• C)the inflation rate is stable; there is an output gap
• D)there is an output gap; output equals potential output

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Definitions:

Currency

The system of money in general use in a country or economic bloc, used as a medium of exchange for goods and services.

Secondary Reserves

Liquid assets that are not used as part of a firm's primary operations but can be quickly converted into cash to meet short-term liabilities.

Treasury Bills

Short-term government securities issued with a term typically less than one year, used to raise funds for government expenses.

Bank Loan

A sum of money borrowed from a bank that must be repaid with interest over a predetermined time period.