The economy is in long-run equilibrium when ________ and ________
A) real GDP equals potential GDP; the unemployment rate equals zero
B) the output gap equals zero; the inflation rate equals the target inflation rate and the expected inflation rate
C) the output gap is at its maximum; the inflation rate equals the target inflation rate and the expected inflation rate
D) the unemployment rate equals the natural rate of unemployment; the inflation rate equals zero
B
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Changes in which of the following do NOT shift the AS curve?
i. the price level ii. potential GDP iii. the money wage rate A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii
Which of the following is the most important pre-requisite to a well-functioning market economy?
A) Goods must be non-scarce. B) Everyone must have an adequate income. C) Participants must follow some clear, general rules. D) People must have roughly similar tastes and preferences. E) There must be approximate equality of incomes.