LONG-TERM

Usually written as long-term when used in a specific reference. In accounting, long-term refers to everything that exceeds the normal exploitation cycle. If no specific information added, it is normally any period of time above 12 months, although it depends on the activity it refers to. In economics, the definition of long-term depends in which field, micro (like accounting) or macro, you are referring to. In macroeconomics, long-term, also known as “the long-run”, is used to describe a period longer than 5-10 years and up to 30 years.

In economics, the definition of long-term depends in which field, micro (like accounting) or macro, you are referring to. In macroeconomics, long-term, also known as “the long-run”, is used to describe a period longer than 5-10 years and up to 30 years.

Although in accounting it is usually used “long-term” as a period of time above 12 months, when it comes to making economic analysis its more common to find long-term as a period of time above five years.

In the long-term, all factors of production are variable; no fixed factors exist, keeping in mind that such factors are normally capital and labor. This is why economic growth is possible in long-term because it allows the production possibility frontier (curve that shows the maximum quantities of goods and services that an economy is able to produce during a certain period of time) to move to the right. Such movement means that more goods and services can be produced in an economy.