While price misperceptions can cause an increase labour supply and GDP in the short-run, in the long run:
A)money is neutral.
B)money does not affect real GDP.
C)labour supply returns to its initial position.
D)all of the above.

Question

Quizplus · Accepted Answer

In the long run, money is considered neutral, meaning it does not affect real variables like real GDP or the real labor supply. Thus, any short-term effects on labor supply and GDP due to price misperceptions are corrected over time, leading to the restoration of the initial positions of these variables.

While Price Misperceptions Can Cause an Increase Labour Supply and GDP