The long run aggregate supply:
A)is downward sloping.
B)is vertical.
C)is horizontal.
D)is upward sloping.

Question

Quizplus · Accepted Answer

The long run aggregate supply (LRAS) is vertical because it represents the potential output of an economy when all resources are fully utilized and there is no cyclical unemployment. In the long run, changes in the price level do not affect the output level, as factors of production (land, labor, capital, and entrepreneurship) adjust to their long-run equilibrium levels. Thus, LRAS is not affected by changes in the price level, making it a vertical line.

The Long Run Aggregate Supply