In the short run,
A) the labor market is always in equilibrium
B) actual output can deviate from potential output
C) crowding out is always complete
D) total output is independent of spending
E) spending is independent of total income

Question

Quizplus · Accepted Answer

In the short run, actual output can deviate from potential output due to various factors such as changes in consumer spending, shifts in aggregate demand and supply, and technological advancements. Therefore, option B is the correct answer. The other options - A, C, D, and E - are incorrect because the labor market can be in disequilibrium, crowding out may not be complete, total output is affected by spending, and spending is influenced by total income.

In the Short Run