Question

The relationship between the price level and the real output of goods and services in the...

The relationship between the price level and the real output of goods and services in the economy without full adjustment or full information is represented by____.
A) the distance between the long run aggregate supply curve and the short run aggregate supply curve
B) the AD curve
C) the short run aggregate supply curve
D) the long run aggregate supply curve

Homework Answers

Answer #1

Answer - The relationship between the price level and the real output of goods and services in the economy without full adjustment or full information is represented by the distance between the long run LRAS and SRAS. The short run equilibrium shifts from original equilibrium point without full adjustment and full information. Full adjustment will bring economy at original level of output but price may rise or fall.

Option A is the correct answer.  

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