In the long run, the aggregate price level has:
A) no effect on the quantity of aggregate output.
B) a positive effect on the quantity of aggregate output.
C) a negative effect on the quantity of aggregate output.
D) an effect on aggregate output but none on employment.

Question

Quizplus · Accepted Answer

The aggregate price level, also known as the overall level of prices in the economy, does not affect the quantity of aggregate output in the long run. In the long run, changes in the price level will not affect the economy's overall level of output, but will only affect the general price level. This is known as the vertical long run Phillips Curve.

In the Long Run, the Aggregate Price Level Has