Question

A competitive market is in long-run equilibrium. if demand increases, we can be certain that price will

Answer 1

A competitive market is in long-run equilibrium. if demand increases, we can be certain that the price will increase because there is less supply .

Further Explanation

In macroeconomics, long-run equilibrium occurs when the aggregate demand curve intersects the short-run aggregate supply curve at the point of the long-run aggregate supply curve. At this point, a country's actual real GDP will be equal to potential GDP. The unemployment rate will be at the natural rate, leaving only frictional unemployment and structural unemployment.

Long-term equilibrium is where the economy settles in a long-term macroeconomic balance. But economic equilibrium often deviates from the long run. This occurs due to fluctuations in short-term aggregate supply and aggregate demand.

Fluctuations in the economy occur when real GDP deviates from potential GDP. These fluctuations occur in the short term and form what we call the business cycle. Deviations from real GDP to potential PBB are called gaps, where when real GDP is higher than potential GDP, there is an inflation gap and when real GDP is lower than potential GDP, there is a recessionary gap.

To moderate the short-term gap, so that it is not too large, the government can use fiscal policy as a tool and the central bank can use monetary policy as a tool to close this gap and return to long-term equilibrium.

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long-run equilibrium brainly.com/question/6827219

macroeconomics brainly.com/question/6827219

Details

Class: High School

Subject: Business

Keyword: equilibrium, macroeconomics, long-run

Answer 2

In this situation, we can be certain that price will fall in the short run. All, some, or no firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium.
When demand increases, more and more companies will try to lower the price of the products so they are favored among their competitors. Because of the harsh competition, some firms will not receive enough sales and will opt out to close down their business but some will survive and thrive.