The relationship between actual output in an economy, the long-run component, and the short-run component is given as: Long-run trend = Current output + Short-run fluctuations.

Question

Quizplus · Accepted Answer

The correct relationship is: Current output = Long-run trend + Short-run fluctuations. The long-run trend represents the potential output, while short-run fluctuations account for deviations from this trend.

The Relationship Between Actual Output in an Economy, the Long-Run