Which statement is consistent with the long-run theories studied?
A) In the long run, output responds to the aggregate demand and supply of goods and services; the interest rate adjusts to balance the supply and demand for money; and the price level adjusts to balance the supply and demand for loanable funds.
B) In the long run, output is determined by the amount of capital, labour, and technology; the interest rate adjusts to balance the supply and demand for loanable funds; and the price level adjusts to balance the supply and demand for money.
C) In the long run, output is determined by the amount of capital, labour, and technology; the interest rate adjusts to balance the supply and demand for loanable funds; and the price level is stuck.
D) In the long run, output responds to the aggregate demand for goods and services; the interest rate adjusts to balance the supply and demand for loanable funds; and the price level adjusts to balance the supply and demand for money.

Question

Quizplus · Accepted Answer

The statement that "in the long run, output is determined by the amount of capital, labour, and technology; the interest rate adjusts to balance the supply and demand for loanable funds; and the price level adjusts to balance the supply and demand for money" is consistent with long-run theories such as the neoclassical and classical models. These theories emphasize the importance of factors such as technology and capital accumulation in determining long-run economic growth, and also explain how the economy adjusts over time to changes in the supply and demand for money and loanable funds.

Which Statement Is Consistent with the Long-Run Theories Studied