What is the best definition of the short term in the short-term model?
A) about two years
B) the amount of time the economy spends at its potential output
C) the length of time for short-term deviations to return to their long-run values
D) the length of a recession
E) There is no such thing as the short term.

Question

Quizplus · Accepted Answer

The short term in the short-term model refers to the length of time it takes for short-term deviations (such as fluctuations in output, employment, and prices) to return to their long-run values. This can vary depending on the specific context, but generally involves a time frame of a few years. Choice A is too specific and may not apply to all situations. Choice B refers to potential output, which is a long-run concept. Choice D focuses on recessions, which are a specific type of short-term deviation. Choice E is incorrect as the short term is a commonly used time frame in economics.

What Is the Best Definition of the Short Term in the Short-Term