Long-run equilibrium in the goods and services market requires that decision makers who agreed to long-term contracts must have
A) incorrectly anticipated the level of prices when they made the agreements.
B) correctly anticipated the level of prices when they made the agreements.
C) correctly anticipated the natural rate of unemployment when they made the agreements.
D) correctly anticipated actual GDP when they made the agreements.

Question

Quizplus · Accepted Answer

Long-run equilibrium in the goods and services market occurs when the aggregate quantity demanded equals the aggregate quantity supplied at the full-employment level of real output. This means that decision makers who agreed to long-term contracts must have correctly anticipated the level of prices when they made the agreements, as the actual level of prices will be the same as that which was anticipated in the contracts.

Long-Run Equilibrium in the Goods and Services Market Requires That