In the long run, the level of output is determined by the:
A) interaction of supply and demand.
B) money supply and the levels of government spending and taxation.
C) amounts of capital and labor and the available technology.
D) preferences of the public.

Question

Quizplus · Accepted Answer

The amount of output is primarily determined by the amounts of capital and labor, as well as available technology. The availability and efficiency of these factors of production ultimately impact the level of output that can be produced. Supply and demand, government policies, and consumer preferences can certainly impact output in the short run, but in the long run it is the factors of production that are the primary determinants.

In the Long Run, the Level of Output Is Determined