The long run is the period of time during which:
A)real wage is exactly equal to nominal wage.
B)inflation is zero.
C)excess aggregate demand leads to a shortage.
D)real wages are constant.
E)all resource prices can be varied.

Question

Quizplus · Accepted Answer

In the long run, all resource prices, including wages, can be varied. This allows for adjustments to occur and for the economy to reach a new long-run equilibrium. In the long run, real wages may also change depending on changes in productivity and technology, but they should not be confused with nominal wages, which can change due to inflation. Inflation may not necessarily be zero in the long run, but it should be stable and predictable. Excess aggregate demand leading to a shortage is a short-run phenomenon that should eventually be resolved in the long run.

The Long Run Is the Period of Time During Which