According to the long-run aggregate supply curve, when _____, the quantity of aggregate output supplied _____.
A) nominal wages rise; falls
B) the aggregate price level rises; does not change
C) the aggregate price level rises; falls
D) the price of commodities falls; rises

Question

Quizplus · Accepted Answer

According to the long-run aggregate supply curve, changes in the aggregate price level do not affect the quantity of aggregate output supplied in the long-run. This is because in the long-run, nominal wages and other input prices adjust to changes in the aggregate price level, allowing firms to produce the same amount of output at different price levels. Thus, choice B is the correct answer. Choices A, C, and D are incorrect as they do not reflect the relationship described by the long-run aggregate supply curve.

According to the Long-Run Aggregate Supply Curve, When _____, the Quantity