Which of the following statements is true?
A) If current Real GDP is greater than Natural Real GDP,the economy is in a recessionary gap.
B) If current Real GDP is less than Natural Real GDP,the economy is in long-run equilibrium.
C) Wages are flexible if the economy is self-regulating.
D) Wages rise but prices remain constant in long-run equilibrium.
E) All economists believe the economy is self-regulating.

Question

Quizplus · Accepted Answer

Wages are considered flexible in a self-regulating economy because it is assumed that over time, wages will adjust to the levels needed to bring the economy back to its natural level of output without intervention. This flexibility helps to correct imbalances between supply and demand in the labor market, allowing the economy to return to equilibrium naturally.

Which of the Following Statements Is True