The position of the long-run aggregate supply curve
A)is determined by the things that determine output in the classical model.
B)is at the point where unemployment is zero.
C)shifts to the right when the price level increases.
D)is at the point where the economy would cease to grow.

Question

Quizplus · Accepted Answer

The position of the long-run aggregate supply curve is determined by the factors that determine potential output in the classical model, such as technology, capital stock, and labor force. It is not affected by changes in the price level or the level of unemployment. The long-run aggregate supply curve represents the maximum amount of output that can be produced in the long-run, assuming all resources are being used efficiently.

The Position of the Long-Run Aggregate Supply Curve