A characteristic of the short run in macroeconomics is that
A)actual GDP is always growing at the same rate as potential GDP.
B)the output gap opens or closes as the economy moves through the phases of the business cycle.
C)the output gap is constant because the capital stock cannot change.
D)actual GDP is always less than potential GDP.
E)actual GDP is always greater than potential GDP.

Question

Quizplus · Accepted Answer

In the short run, the output gap (difference between actual GDP and potential GDP) can open or close as the economy moves through the phases of the business cycle. This is because of factors such as changes in consumer spending, business investment, and government spending, which can affect overall demand and production levels. The other options are not true of the short run.

A Characteristic of the Short Run in Macroeconomics Is That