(I)If long-run equilibrium is present in the goods and services market,the current price level will equal the price level buyers and sellers anticipated.
(II)When an economy is in long-run equilibrium,the actual rate of unemployment will equal the natural rate of unemployment.
A)Both I and II are true.
B)Both I and II are false.
C)I is true;II is false.
D)I is false;II is true.

Question

Quizplus · Accepted Answer

Both statements are true. In the case of statement (I), in the long run, prices will adjust such that the quantity of goods and services supplied equals the quantity demanded, resulting in an equilibrium in the goods and services market. This equilibrium price level will then become the price level that buyers and sellers expect and therefore anticipate. 
In the case of statement (II), in the long run, the actual rate of unemployment will converge towards the natural rate of unemployment, which is the rate of unemployment that exists in the absence of cyclical fluctuations and is caused by structural and frictional factors in the labor market. When the economy is in long-run equilibrium, the economy is operating at potential GDP, and the labor market is in equilibrium, resulting in the natural rate of unemployment.

(I)If Long-Run Equilibrium Is Present in the Goods and Services