Which of the following statements is correct for the short run?
A)Output is determined by the amount of capital,labor,and technology;the interest rate adjusts to balance the supply and demand for money;the price level adjusts to balance the supply and demand for loanable funds.
B)Output is determined by the amount of capital,labor,and technology;the interest rate adjusts to balance the supply and demand for loanable funds;the price level adjusts to balance the supply and demand for money.
C)Output responds to the aggregate demand for goods and services;the interest rate adjusts to balance the supply and demand for money;the price level is relatively slow to adjust.
D)Output responds to the aggregate demand for goods and services;the interest rate adjusts to balance the supply and demand for loanable funds;the price level adjusts to balance the supply and demand for money.

Question

Quizplus · Accepted Answer

In the short run, output is primarily determined by aggregate demand, which is influenced by factors such as consumer spending, government spending, and investment. The interest rate adjusts to balance the supply and demand for money, but the price level is relatively slow to adjust due to factors such as menu costs and wage stickiness. Therefore, choice C is the correct statement for the short run.

Which of the Following Statements Is Correct for the Short