Which of the following is true of an economy in the long run?
A) The economy operates on its production possibility frontier.
B) The rate of inﬂation is expected to be very high.
C) Wage rates increase faster than inﬂation rates.
D) There is a high level of unemployment in the economy.

Question

Quizplus · Accepted Answer

In the long run, an economy is expected to operate on its production possibility frontier, indicating that it is utilizing all available resources efficiently. Choices B, C, and D describe conditions that are not characteristic of a healthy long-run economy.

Which of the Following Is True of an Economy in the Long