Which of the Following Is True in the Long Run

question 48

Multiple Choice

Which of the following is true in the long run?

• A)The aggregate supply curve is the key determinant of the level of potential output.
• B)The long-run aggregate supply curve is horizontal.
• C)The actual price level is less than the expected price level.
• D)Cyclical unemployment is between 5 percent and 6 percent.
• E)The price level is determined entirely by the long-run aggregate supply curve.

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Definitions:

Goods And Services

Physical products and intangible activities that fulfill the needs or wants of consumers, forming the basis of all economic activity.

Production Possibilities Curve

A graphical representation that shows the different combinations of two goods or services that can be produced within a given resource constraint.

Fully Employed

A situation in which all available labor resources are being used in the most economically efficient way.

Production Possibilities Frontier

Represents the maximum potential output of two goods or services an economy can produce when all resources are used efficiently, graphically illustrating opportunity costs and economic efficiency.