The short run is a period of time
A)when there is an expansionary gap and firms run their plants only for short periods
B)of one year or less
C)when there is a contractionary gap
D)during which resource buyers and sellers cannot adjust fully to changes in the price level
E)when resource buyers and sellers can adjust fully to changes in the price level

Question

Quizplus · Accepted Answer

In the short run, resource buyers and sellers cannot fully adjust to changes in the price level, which leads to a mismatch between aggregate supply and demand. The short run can be longer or shorter than a year, and it can be characterized by both expansionary and contractionary gaps depending on the state of the economy. However, neither of these factors is a defining feature of the short run.

The Short Run Is a Period of Time