In the long run:
A) real GDP is determined by the aggregate supply.
B) increases in the supply of money lead to increases in real GDP.
C) prices are sticky.
D) real GDP is completely demand- determined.

Question

Quizplus · Accepted Answer

Real GDP is determined by the aggregate supply in the long run, meaning the total output of goods and services produced in an economy depends on the availability of resources, technology, and capital. Increases in the supply of money may lead to short-run changes in output, but in the long run, changes in the money supply only affect prices. Prices are also typically sticky in the short run, but in the long run, they adjust to changes in supply and demand. Real GDP is not completely demand-determined, as it ultimately depends on the ability of an economy to produce goods and services.

In the Long Run