Many economists think that, in the long run, the economy generally tends to move toward:
A)an accelerating inflation rate.
B)a stable price level.
C)the natural or full-employment rate of inflation.
D)the natural or full-employment rate of unemployment.

Question

Many economists think that, in the long run, the economy generally tends to move toward:
A)​an accelerating inflation rate.
B)​a stable price level.
C)​the natural or full-employment rate of inflation.
D)​the natural or full-employment rate of unemployment.

Quizplus · Accepted Answer

The long run tends towards the natural rate of unemployment where there is full employment and the economy is producing at its potential. This is because over time, market forces will adjust and correct any imbalances in the labor market, bringing unemployment back to its natural rate. Inflation may fluctuate in the short run, but in the long run, it is also expected to be stable at a moderate level.

Many Economists Think That, in the Long Run, the Economy