When inflation equals the value determined by past expectations and pricing decisions and output equals the level of short-run equilibrium output consistent with that inflation, the economy is said to be in ________ equilibrium.
A)potential
B)short-run
C)long-run
D)full-employment

Question

Quizplus · Accepted Answer

Short-run equilibrium is a situation in which inflation equals the value determined by past expectations and pricing decisions and output equals the level of short-run equilibrium output that is consistent with that inflation rate.

When Inflation Equals the Value Determined by Past Expectations and Pricing