In the long run, adjustments to negative or positive shocks to the economy works

Question

In the long run, adjustments to negative or positive shocks to the economy works through self-correcting mechanism of markets

  If wages and prices are flexible (i.e., can go down or up).

If government keep its fiscal house in order by having a balanced budget.

If government avoid any intervention in the economy and have a budget surplus.

If government uses stabilization policies to help the economy out of its downturns or upturns

  If wages and prices are flexible (i.e., can go down or up).

If government keep its fiscal house in order by having a balanced budget.

If government avoid any intervention in the economy and have a budget surplus.

If government uses stabilization policies to help the economy out of its downturns or upturns

Explanation / Answer

Ans

A is right Answer. Flexible prices and wages increase and/or decrease employment and supply, demand to restore full employment equilibrium

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