The long-run aggregate supply curve is horizontal.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is actually vertical, not horizontal. This is because in the long run, all factors of production are variable, meaning that firms can adjust their production levels to meet changes in demand without experiencing any cost push inflation. Therefore, the long-run aggregate supply curve is not affected by changes in price level, and is represented by a vertical line on a graph.

The Long-Run Aggregate Supply Curve Is Horizontal