The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change
A)in the price level and real GDP.
B)in the price level, but not real GDP.
C)in real GDP, but not the price level.
D)in neither the price level nor real GDP.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical, suggesting that changes in aggregate demand will only affect the price level and not real GDP in the long run. This is because in the long run, all inputs are variable and firms can increase production to meet the new level of aggregate demand without affecting the economy's overall output level.

The Long-Run Aggregate Supply Curve Shows That by Itself a Permanent