Which of the following is true in the long run?
A)The aggregate demand curve determines the level of potential output.
B)The long-run aggregate supply curve is horizontal.
C)The actual price level and the expected price level are equal.
D)Cyclical unemployment is between 5 percent and 6 percent.
E)The price level is determined entirely by the long-run aggregate supply curve.

Question

Quizplus · Accepted Answer

In the long run, the actual price level and the expected price level tend to converge because economic agents adjust their expectations based on actual outcomes, leading to an alignment of actual and expected price levels.

Which of the Following Is True in the Long Run