The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A)short-run equilibrium property.
B)self-correcting property.
C)income-expenditure multiplier.
D)long-run equilibrium property.

Question

Quizplus · Accepted Answer

The economy has a self-correcting property because prices change to reflect changing supply and demand conditions. Note that inflation adjusts gradually to bring the economy into long-run equilibrium.

The Fact That Output Gaps Will Not Last Indefinitely, but Will