In the long run
A) prices are sticky.
B) the economy operates at full employment.
C) increases in government spending do not effect other uses of output.
D) increases in the money supply increase the level of output.

Question

Quizplus · Accepted Answer

In the long run, the economy is expected to adjust to its full employment level, where all available resources are utilized efficiently. Prices are not sticky in the long run (they adjust to changes in supply and demand), and increases in government spending and the money supply primarily affect price levels rather than output in the long-term perspective.

In the Long Run