The long-run aggregate supply curve is
A) vertical at the full employment level of real GDP.
B) horizontal at the full employment price level.
C) upward sloping because of the effects of price level changes on real GDP.
D) the same as the short-run aggregate supply curve.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical at the full employment level of real GDP because in the long-run, changes in the price level do not affect the level of output. In other words, the economy will eventually reach its maximum potential output regardless of the price level.

The Long-Run Aggregate Supply Curve Is