The macroeconomic long run is best defined as
A) the time period sufficiently long so that real GDP has adjusted to equal potential GDP.
B) a time period of less than 1 year.
C) the time period sufficiently long so that real GDP has adjusted to exceed potential GDP.
D) a time period of more than 1 year.

Question

Quizplus · Accepted Answer

The macroeconomic long run is the time period sufficiently long so that the economy has fully adjusted to reach its potential output level, which occurs when real GDP equals potential GDP. This process can take several years, and is influenced by factors such as capital accumulation and productivity growth. Choice B and D are incorrect because the long run is typically measured in years or even decades, while choice C is incorrect since potential GDP represents the maximum sustainable output level of the economy, and therefore cannot be exceeded in the long run.

The Macroeconomic Long Run Is Best Defined as