Which of the following will always be true when an economy is in long-run equilibrium?
A) The level of prices will be constant (that is, inflation will be zero).
B) Actual output will exceed the potential output.
C) The actual rate of unemployment will be less than the natural rate of unemployment.
D) The output of the economy will correspond with the full-employment output.

Question

Quizplus · Accepted Answer

In long-run equilibrium, the economy is producing at the full-employment output level, which is the level of output at which all available resources are being utilized and there is no cyclical unemployment. This means that the economy is producing at its potential output, which is the level of output that can be sustained in the long-run without causing inflation. Therefore, choice D is the correct answer.

Which of the Following Will Always Be True When an Economy