The economy enters the long run once:
A)nominal wages become real wages.
B)real wages become nominal wages.
C)input prices start to change from being inflexible to fully flexible.
D)sufficient time has elapsed for real GDP to increase and unemployment to decrease.

Question

Quizplus · Accepted Answer

The long run is characterized by fully flexible input prices, which means that prices can adjust to changes in supply and demand without causing inefficiencies in the markets. This is only possible once input prices become fully flexible, which is the case in choice C.  A, B, and D do not accurately describe the entry into the long run.

The Economy Enters the Long Run Once