CLEP Macroeconomics Terms & Definitions Practice Test

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Long run aggregate supply
Practice of buying at a low price and selling at a high price. arbitrage prevents exchange rates from being different in one place than in another for any significant period of time
When the equilibrium real GDP level is below the full employment output level. the recessionary gap is the amount by which equilibrium would have to increase to reach full employment output level
Occurs as unemployed workers and firms search for the best available worker-job matches.
Vertical and stands at the level of output that corresponds with full employment. in the long run, wages and other input prices will adjust in accordance with output prices and vice versa. therefore, the purchasing power of per-unit profits does not change, eliminating the incentive to produce more or less output at higher or lower price levels