The long-run aggregate supply curve is vertical at
A) potential output.
B) the actual level of real output.
C) the actual level of nominal output.
D) 100% employment of the labor force.

Question

Quizplus · Accepted Answer

The long-run aggregate supply (LRAS) curve represents potential output, which means the maximum amount of goods and services an economy can produce when all resources are fully utilized. In the long run, changes in the price level do not affect potential output, so the LRAS curve is vertical at this level. Choices B, C, and D are incorrect because they do not represent the concept of potential output.

The Long-Run Aggregate Supply Curve Is Vertical at