Refer to the information provided in Figure 26.7 below to answer the question(s) that follow. Figure 26.7
-Refer to Figure 26.7. $700 million is the level of aggregate output that can be sustained in the long run
A) without inflation.
B) only with inflation.
C) only with deflation.
D) only with unemployment.

Question

Refer to the information provided in Figure 26.7 below to answer the question(s) that follow.  Figure 26.7
-Refer to Figure 26.7. $700 million is the level of aggregate output that can be sustained in the long run
A) without inflation. 
B) only with inflation. 
C) only with deflation. 
D) only with unemployment.

Quizplus · Accepted Answer

The vertical long-run aggregate supply curve in Figure 26.7 indicates that, in the long run, the economy can produce a sustainable level of output without experiencing inflation. This is because, in the long run, the economy reaches its potential output, and any increase in aggregate demand will only result in higher prices, rather than an increase in output.

Refer to the Information Provided in Figure 26