If prices are fully flexible, there will be no short-run fluctuations, which means output will Blank______ and unemployment will Blank______ because quantity demanded will always equal quantity supplied.

Question

Multiple choice question.

remain constant; not change

increase; not change

decrease; not change

Answer 1

If prices are fully flexible, there will be no short-run fluctuations, which means output will remain constant and unemployment will not change because quantity demanded will always equal quantity supplied.

So the correct answer is: remain constant; not change.