The fact that output gaps will not last indefinitely, but will be closed by rising or falling prices 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's self-correcting property refers to its ability to adjust to changes in economic conditions and return to equilibrium. In the case of output gaps, the economy will adjust by rising or falling prices, which will close the gap and return the economy to equilibrium.

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