In the short-run model, the steady state is characterized by:
A) $\pi _ { t } = \pi _ { t - 1 }$
B) $\pi _ { t } = \bar { \pi }$
C) $\bar { a } = \bar { a } = 0$
D) All of these answers are correct.
E) None of these answers are correct.

Question

Quizplus · Accepted Answer

In the short-run model, the steady state is characterized by inflation being constant, which can be represented by both $\pi _ { t } = \pi _ { t - 1 }$ and $\pi _ { t } = \bar { \pi }$, and output gap $\bar { a } = 0$. Thus, all the given conditions are correct for the steady state.

In the Short-Run Model, the Steady State Is Characterized By πt=πt−1\pi _ { t } = \pi _ { t - 1 }πt​=πt−1​

In the Short-Run Model, the Steady State Is Characterized By $\pi _ { t } = \pi _ { t - 1 }$