In the long run ________.
A)the amount of output an economy can produce is determined by real variables like capital,labor and technological advances
B)aggregate supply is fixed at the potential level of output
C)there is enough time for prices to fully adjust so the classical dichotomy holds
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

In the long run, the economy's output is determined by its resources and technology (A), aggregate supply is indeed fixed at the potential level of output as all resources are fully utilized (B), and prices have time to adjust, making the classical dichotomy (the separation of real and nominal variables) applicable (C).

In the Long Run ________