The long-run aggregate supply curve is
A) vertical at the level of full-employment output.
B) horizontal at the going-price level.
C) illustrating a positive relationship between price and output.
D) illustrating a negative relationship between price and output.
E) the same as the short-run aggregate supply curve.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical at the level of full-employment output because in the long run, all inputs are variable and can adjust to changes in prices. Therefore, any increase in prices simply results in an increase in input prices, meaning that output remains at full-employment levels.

The Long-Run Aggregate Supply Curve Is