In the long-run AS-AD model,
A) the position of the AD curve determines output
B) the self-correcting mechanism of the economy is irrelevant
C) the AS curve shifts leftward whenever the economy is growing
D) the position of the AD curve determines the price level
E) output fluctuates a great deal

Question

Quizplus · Accepted Answer

In the long-run AS-AD model, the aggregate supply (AS) curve is vertical, indicating that output is determined by factors like technology and resources, not by the aggregate demand (AD) curve. Therefore, the position of the AD curve affects the price level, not output.

In the Long-Run AS-AD Model