The long run in macroeconomic analysis is a period
A. in which wages and some other prices are sticky.
B. in which the capital stock is held constant.
C. in which full wage and price flexibility and market adjustment have been achieved.
D. greater than 12 months.
Ans: C. in which full wage and price flexibility and market adjustment have been achieved.
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A seller who continues to earn the same gross revenue from sales whether she raises or lowers her prices faces a demand curve that
A) contradicts the law of demand. B) is completely elastic. C) is completely inelastic. D) is unit elastic. E) is vertical.
Given full-employment output = $2,800, equilibrium real GDP = $2,500, and MPS = 0.25, which of the following changes would most likely bring the economy to a full-employment level of real GDP?
a. $300 decrease in taxes. b. $75 increase in government spending. c. $75 decrease in taxes. d. $300 increase in government spending. e. $75 decrease in government spending.