On the long-run aggregate supply curve,
A)an increase in the price level increases the aggregate quantity of GDP supplied.
B)an increase in the price level reduces the aggregate quantity of GDP supplied.
C)an increase in the price level has no effect on the aggregate quantity of GDP supplied.
D)an increase in the price level increases the level of potential GDP.
E)an increase in the price level increases the aggregate quantity GDP demanded.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical, indicating that changes in the price level do not affect the aggregate quantity of GDP supplied. This is because, in the long run, the economy's output is determined by factors such as technology and resources, not by the price level.

On the Long-Run Aggregate Supply Curve