The long-run aggregate supply curve is vertical because
A) in the short run, prices are flexible but output is equal to potential output.
B) in the long run, prices are flexible but output is equal to potential output.
C) in the short run, prices are fixed but output may be above, below, or equal to potential output.
D) in the long run, prices are fixed and output is equal to potential output.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical because, in the long run, prices are flexible and the economy's output is determined by its potential output, which is based on factors like technology, capital, and labor, rather than the price level.

The Long-Run Aggregate Supply Curve Is Vertical Because