The long-run aggregate supply curve
A) is vertical
B) is upward sloping
C) is downward sloping
D) is horizontal
E) can have a variety of shapes depending on fiscal policy

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical because in the long run, all inputs can be adjusted and there are no constraints on production. This means that increases in aggregate demand will only result in a temporary increase in output as prices adjust to match the increase in demand. This results in no change in the long-run aggregate supply.

The Long-Run Aggregate Supply Curve