The economy's long run aggregate supply curve
A) is horizontal,indicating that the economy always reaches full employment in the long run.
B) is vertical at the full-employment level of output,indicating that the price level is constant in the long run.
C) is horizontal,indicating that prices are constant in the long run.
D) is vertical at the full-employment level of output,indicating that the economy always reaches full employment in the long run.
E) is vertical at the zero budget deficit level of output.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical at the full-employment level of output, indicating that the economy always reaches full employment in the long run, regardless of the price level.

The Economy's Long Run Aggregate Supply Curve