Answered

Which of the following is true if the economy is in long run equilibrium?
O There is an inflationary output gap in the economy.
O There is a deflationary output gap in the economy.
Equilibrium is unstable and will go on fluctuating.
There is full employment in the economy.
Full employment level is not achievable in the long run.



Answer :

GinnyAnswer

Final answer:

Full employment is achieved in long-run equilibrium, while inflationary and deflationary output gaps signify deviations from equilibrium.


Explanation:

Full employment in the economy is true if the economy is in long-run equilibrium. In the long run, the natural level of employment is achieved as the economy operates at its potential output. In contrast, inflationary and deflationary output gaps indicate deviations from the equilibrium level.


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