Asked by Isabella Gutierrez on Jun 27, 2024
Verified
Which of the following is true in the short run but not in the long run?
A) Actual output is equal to potential output.
B) Actual output can exceed potential output.
C) Structural unemployment can exist.
D) Frictional unemployment can exist.
E) Real and nominal GDP can differ.
Actual Output
The real production level of goods and services in an economy within a specific period, measured by GDP.
Potential Output
The maximum amount of goods and services an economy can produce when it is fully employed, without causing inflation.
Structural Unemployment
The occurrence of unemployment because of modifications in the industrial sector, typically induced by technological evolution, as opposed to alterations in the supply or demand of the market.
- Explore the determinants shaping the short-run aggregate supply curve.
- Grasp the dynamics between alterations in price levels and their influence on real wages and employment statuses.
Verified Answer
ZK
Zybrea KnightJul 01, 2024
Final Answer :
B
Explanation :
In the short run, it's possible for actual output to exceed potential output due to high demand and the economy operating above its sustainable capacity. However, in the long run, actual output tends to converge with potential output as resources are fully utilized and the economy cannot sustainably operate above its potential output due to constraints like labor and capital.
Learning Objectives
- Explore the determinants shaping the short-run aggregate supply curve.
- Grasp the dynamics between alterations in price levels and their influence on real wages and employment statuses.