Which of the following statements is TRUE?
A) The long- run aggregate supply curve is vertical.
B) The long- run aggregate supply curve is upward sloping.
C) The short- run aggregate supply curve is vertical.
D) The long- run aggregate demand curve is upward sloping.

Question

Quizplus · Accepted Answer

In the long run, the aggregate supply is determined by the economy's potential output, which is independent of the price level. Therefore, the long-run aggregate supply curve is vertical. Choice B is incorrect because the long-run aggregate supply curve is not upward sloping. Choice C is incorrect because the short-run aggregate supply curve is upward sloping due to sticky prices and wages. Choice D is incorrect because there is no such thing as a long-run aggregate demand curve.

Which of the Following Statements Is TRUE