According to the price-adjustment mechanism,trade deficits can occur only in the long run rather than in the short run.

Question

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The price-adjustment mechanism suggests that trade deficits can occur in both the short and long run. In the short run, prices and wages may not adjust quickly enough to balance out the trade deficit, leading to a temporary imbalance. In the long run, prices and wages are more flexible and can adjust to correct for trade imbalances.

According to the Price-Adjustment Mechanism,trade Deficits Can Occur Only in the Long