The reason the income and expenditure shortrun macro model s
The reason the income and expenditure (short-run) macro model suggests that the economy can operate either above or below its potential while in the long-run classical model the economy operates automatically at full employment is that
| a. | the short-run macro model is flawed and inaccurate |
Solution
They measure completely different aspects of economy. In one model full adjustment does not occur but in other it occurs
