The Economy Is in Long-Run Equilibrium When ________ and ________

Multiple Choice

The economy is in long-run equilibrium when ________ and ________.

A) real GDP equals potential GDP; the unemployment rate equals zero
B) the output gap equals zero; the inflation rate equals the target inflation rate and the expected inflation rate
C) the output gap is at its maximum; the inflation rate equals the target inflation rate and the expected inflation rate
D) the unemployment rate equals the natural rate of unemployment; the inflation rate equals zero