In the long run, the output of the economy:

Question

BlackTom AI · Accepted Answer

When analyzing the long-run behavior of an economy's output, it is essential to consider that several fundamental factors can change over time, not just a fixed set of conditions.
Option a states that output is fixed because capital, labor, and technology are fixed. This is incorrect because, in the long run, these factors are not fixed: capital stock can grow or shrink, the labor force can expand or contract, and technological progress can occur, all of which influence output.
Option b claims that output is fixed because demand for goods and services is fixed. This is also incorrect because, in the long run, demand is not fixed; it can respond to income growth, relative prices, and other macroeconomic dynamics, while supply-side factors are changing as well, leading to changes in output.
Option c asserts that output varies because the supplies of capital and labor vary. This is the most accurate among the choices because changes in the amounts of capital and labor—along with other changes like technology—drive long-run output growth. As the quantities of capital and labor grow or shrink, the economy's productive capacity expands or contracts, leading to changes in potential output.
Option d says output varies because the ratio of capital and labor changes over time. While the capital–labor ratio (and thus the level of output for a given technology) does influence long-run output, this statement is incomplete on its own because it ignores that the absolute supplies of capital and labor and improvements in technology also affect output. Relying solely on the ratio misses the broader picture of how changes in inputs and technology interact to determine long-run output.
In summary, the long-run variation in output is driven by changes in the fundamental productive resources—capital, labor, and technology—rather than a fixed demand or a sole focus on the capital–labor ratio, making option c the most comprehensive and accurate choice among those presented.

BU.220.610.51.FA25 M8 Final Comprehensive Exam - Multiple Choice Questions- Requires Respondus LockDown Browser

In the long run, the output of the economy:

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BU.220.610.51.FA25 M8 Final Comprehensive Exam - Multiple Choice Questions- Requires Respondus LockDown Browser

In the long run, the output of the economy:

View Explanation

Log in for full answers

Similar Questions

Which of the following would cause the change shown in the diagram?

The long-run aggregate supply curve is vertical at the level of output:

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In the figure above, what do the classical/neoclassical economists suggest in terms of achieving full employment in the Long Run?

3. Which of the following describe a long-run aggregate supply curve. a. A vertical line. b. The price level is fixed. c. Output prices are flexible, but input prices are fixed. d. A horizontal line. e. An upsloping curve. f. Output is fixed.

Figure 33-5. ​ Refer to Figure 33-5. The appearance of the long-run aggregate-supply (LRAS) curve

The long-run aggregate supply curve is vertical because

The _____ curve is vertical at full employment.

More Practical Tools for Students Powered by AI Study Helper

Making Your Study Simpler

Figure 33-5. Refer to Figure 33-5. The appearance of the long-run aggregate-supply (LRAS) curve