Question

If an economy is in short-run equilibrium that is below potential, what forces will bring the economy to long-run equilibrium? LO5

    If an economy is in short-run equilibrium that is below potential, what forces will bring the economy to long-run equilibrium? LO5

Macroeconomics

David Colander 8th Edition

Chapter 10, Problem 12

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In this scenario, the actual output of the economy (GDP) is less than its potential output, which is the level of output the economy could achieve if it were operating at full capacity. This situation is often characterized by high unemployment and underused Show more…

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If an economy is in short-run equilibrium that is below potential, what forces will bring the economy to long-run equilibrium? LO5

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