The view that the labor market quickly adjusts to reach equilibrium is consistent with the assumption of _______ aggregate supply curve.
A) a vertical
B) an upward- sloping
C) a downward- sloping
D) a horizontal

Question

Quizplus · Accepted Answer

A vertical aggregate supply curve implies that changes in aggregate demand do not affect the overall level of output or employment in the economy, as the labor market quickly adjusts to reach equilibrium. This view is consistent with the assumption that the economy has flexible wages and prices, and that supply-side factors determine the level of output in the long-run.

The View That the Labor Market Quickly Adjusts to Reach