The rise and fall of real GDP over the course of the business cycle suggests that
A) the economy is always at full employment.
B) the economy may not always be in long-run equilibrium.
C) the economy is always at its potential output level.
D) wage and price stickiness ensures that the economy moves from a peak to a trough.

Question

Quizplus · Accepted Answer

The rise and fall of real GDP over the business cycle suggests that the economy may not always be in long-run equilibrium, as there are fluctuations in output above and below the potential output level. This can happen due to various factors such as changes in consumer and business confidence, government policies, and external shocks.

The Rise and Fall of Real GDP Over the Course