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The Main Difference Between the Short-Run and the Long-Run Aggregate

Question 58

Multiple Choice

The main difference between the short-run and the long-run aggregate supply in the Keynesian model is


A) in the short run prices and wages are assumed fixed,but in the long run they are assumed flexible.
B) in the short run prices are assumed flexible but wages fixed,whereas in the long run both are assumed flexible.
C) in the short run wages are assumed flexible but prices fixed,whereas in the long run both are assumed flexible.
D) in the short run potential GDP is equal to actual GDP,but in the long run the former exceeds the latter.

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