When the economy is using all of its factors of production,the aggregate supply curve is vertical.

Question

Quizplus · Accepted Answer

When the economy is using all of its factors of production, it is operating at full employment equilibrium, and the aggregate supply curve becomes vertical. This is because an increase in demand does not increase output because all resources are already being fully utilized. This is known as the long-run aggregate supply curve.

When the Economy Is Using All of Its Factors of Production,the