The long-run aggregate supply curve is
A) upward-sloping and becomes steeper at output levels above the full-employment output.
B) upward-sloping and becomes ﬂatter at output levels above the full-employment output.
C) horizontal.
D) vertical.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical because in the long run, all inputs can be adjusted to their optimal levels, including labor, capital, technology, and resources. As a result, at any given price level, the economy's potential output is fixed, meaning it is not affected by changes in prices or demand. Therefore, the long-run aggregate supply curve is a vertical line at the potential output level.

The Long-Run Aggregate Supply Curve Is