In the long run,changes in equilibrium GDP are most likely to be caused by
A) changes in full-employment output
B) open market operations by the Fed
C) changes in nominal wages
D) contractionary or expansionary fiscal policy
E) none of these;long-run equilibrium GDP is a constant

Question

Quizplus · Accepted Answer

Changes in equilibrium GDP in the long run are most likely to be caused by changes in full-employment output. Full-employment output refers to the level of output that can be produced when all resources in the economy are fully utilized. Over the long run, changes in the productivity of resources, such as labor and capital, can lead to changes in full-employment output and thus changes in equilibrium GDP. The other choices may impact short-term fluctuations in the economy, but they are not likely to have a sustained impact on long-run equilibrium GDP.

In the Long Run,changes in Equilibrium GDP Are Most Likely