Question

Deficient demand leads to which of the following long-run consequences?

पर्याय

• A rise in prices in the long run

• A rise in prices in the short run

• A decline in prices in the long run

• No change in prices in the long run

Answer 1

When demand is deficient, output is below the full employment level and factors of production remain underemployed. This weakness in demand leads to a decline in prices in the long run.