A difference between the economic long run and the short run is that:
A) the classical dichotomy holds in the short run but not in the long run.
B) monetary and fiscal policy affect output only in the long run.
C) demand can affect output and employment in the short run, whereas supply is the ruling force in the long run.
D) prices and wages are sticky in the long run only.

Question

Quizplus · Accepted Answer

In the short run, demand can affect output and employment, while in the long run, supply dominates. This is because in the short run, firms may be able to adjust their output to meet changes in demand without fully adjusting their prices or wages. However, in the long run, firms will adjust their prices and wages based on changes in demand, which will ultimately affect the overall level of output and employment in the economy. The other options are incorrect: A is incorrect because the classical dichotomy holds in both the short and long run; B is incorrect because monetary and fiscal policy can affect output in both the short and long run; and D is incorrect because prices and wages can be sticky in both the short and long run.

A Difference Between the Economic Long Run and the Short