Which of the following is a defining assumption of the AD/AS macro model in the long run?
A)factor supplies are assumed to be fixed
B)technology used in production is constant
C)the level of potential output is constant
D)factor prices are assumed to be fixed
E)changes in real GDP are determined by the changes in potential output

Question

Quizplus · Accepted Answer

In the long run, the AD/AS model assumes that the economy operates at its potential output, meaning changes in real GDP are determined by changes in potential output, which is influenced by factors like technology and resources.

Which of the Following Is a Defining Assumption of the AD/AS