Business, 01.12.2021 02:10, snowprincess99447
Which of the following best describes the adjustment to long-run equilibrium if an economy's short-run equilibrium output is below potential output? A. Since unemployment is less than its natural rate, there will be excessive tightness in the labor market and, consequently, pressure on firms to raise their prices at a more rapid rate. This acceleration of inflation shifts the short-run aggregate supply curve up, pushing the economy's output down toward its potential output. B. Since unemployment is less than its natural rate, there will be excess slack in the labor market and, consequently, pressure on firms to raise their prices at a less rapid rate. This deceleration of inflation shifts the short-run aggregate supply curve up, pushing the economy's output up toward potential output. C. Since unemployment is greater than its natural rate, there will be excess slack in the labor market and, consequently, pressure on firms to raise their prices at a less rapid rate. This deceleration of inflation shifts the short-run aggregate supply curve down, pushing the economy's output up toward potential output. D. Since unemployment is greater than its natural rate, there will be excess slack in the labor market and, consequently, pressure on firms to raise their prices at a less rapid rate. This deceleration of inflation shifts the short-run aggregate supply curve down, pushing the economy's potential output down toward its short-run output.
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Which of the following best describes the adjustment to long-run equilibrium if an economy's short-r...
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