In the long-run, each of the following is true except
A) prices are flexible.
B) nominal wages are flexible.
C) real GDP fluctuates around potential output.
D) unemployment remains at its natural rate.

Question

Quizplus · Accepted Answer

In the long-run, real GDP does not fluctuate around potential output; instead, it is expected to equal potential output. Choices A, B, and D describe characteristics of the economy in the long run, where prices and wages are flexible, and unemployment stabilizes at the natural rate.

In the Long-Run, Each of the Following Is True Except