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Which of the following characteristics define the short run in macroeconomics? A
Which of the following characteristics define the short run in macroeconomics?
A. Factor prices adjust to output gaps, and technology and factor prices are changing.
B. Factor prices are exogenous, technology and factor prices are endogenous.
C. Factor prices adjust to output gaps, and technology and factor supplies are constant.
D. Factor prices are exogenous, and technology and factor supplies are constant.
E. Factor prices are exogenous, and technology and factor supplies are changing.
Expert Solution
The correct option is D. Factor prices are exogenous, and technology and factor supplies are constant.
Explanation: in short-run macroeconomics, factor prices such as the price of land, labor, and capital will change according to the changing economic conditions. But, technology and factor supplies remain constant because it is difficult for them in the short run.
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