At a short-run equilibrium ________, while at a long-run equilibrium ________.
A)output is at a level consistent with inflation; there is an output gap
B)output equals potential output; the inflation rate is stable
C)the inflation rate is stable; there is an output gap
D)there is an output gap; output equals potential output

Question

Quizplus · Accepted Answer

At a short-run equilibrium there is either a recessionary or expansionary output gap, while at a long-run equilibrium actual output equals potential output.

At a Short-Run Equilibrium ________, While at a Long-Run Equilibrium