When the economy is in long run equilibrium,all of the following are true EXCEPT that the
A) recessionary gap is zero.
B) expansionary gap is zero.
C) inflation rate is zero.
D) actual unemployment rate equals the natural rate of unemployment.
E) actual output equals potential output.

Question

Quizplus · Accepted Answer

In long run equilibrium, there will always be some level of inflation present in the economy due to factors such as supply and demand dynamics, wage and price stickiness, and monetary policy. Therefore, the inflation rate cannot be zero in long run equilibrium.

When the Economy Is in Long Run Equilibrium,all of the Following