For the purpose of aggregate supply analysis, what is the definition of the long run?
A) the period of time during which aggregate supply adjusts to equal aggregate demand
B) the period of time during which excess aggregate demand is fulfilled
C) the period of time during which real wages are constant
D) the period of time during which all resource prices can be varied

Question

For the purpose of aggregate supply analysis, what is the definition of the long run?  
A) the period of time during which aggregate supply adjusts to equal aggregate demand 
B) the period of time during which excess aggregate demand is fulfilled 
C) the period of time during which real wages are constant 
D) the period of time during which all resource prices can be varied

Quizplus · Accepted Answer

In the long run, according to the classical view, all resource prices are flexible and can be adjusted to changes in demand and supply. This means that firms can adjust their production levels and input usage in response to changes in market conditions, without causing inflation or deflation. Therefore, the long run is defined as the period of time during which all resource prices can be varied. The other choices do not fully capture the idea of the long run in macroeconomic analysis.

For the Purpose of Aggregate Supply Analysis, What Is the Definition