Which of the following does NOT necessarily hold when the economy is in long-run equilibrium?
A)Saving equals investment.
B)The nominal interest rate is equal to the real interest rate.
C)The current output supplied is equal to the current output demanded.
D)Households and businesses are willing to accept the mix of money and nonmoney assets they hold.

Question

Quizplus · Accepted Answer

In long-run equilibrium, the nominal interest rate does not necessarily equal the real interest rate because the nominal rate includes inflation expectations, whereas the real rate is adjusted for inflation. The other options (A, C, D) are characteristics of long-run equilibrium in an economy.

Which of the Following Does NOT Necessarily Hold When the Economy