The IS-LM model implies that output always returns to the natural rate in the long run.

Question

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The IS-LM model, in the context of the broader macroeconomic theory, implies that in the long run, the economy tends to return to the natural rate of output, where the labor market is in equilibrium, and output is at its potential level. This is because, in the long run, prices and wages are flexible, allowing the economy to adjust back to its natural rate of output.

The IS-LM Model Implies That Output Always Returns to the Natural