Following any AD or AS shock,economists typically assume that the adjustment process continues until
A)the AD and AS curves intersect each other at the correct price level.
B)real GDP returns to Y*.
C)factor prices have returned to their levels previous to the shock.
D)Y* adjusts to its long-run equilibrium level.
E)the output gap is at a stable level.

Question

Quizplus · Accepted Answer

Economists typically assume that the adjustment process continues until real GDP returns to its potential level (Y*), which represents the economy's long-run equilibrium output.

Following Any AD or AS Shock,economists Typically Assume That the Adjustment