Which of the following statements is true regarding the long-run aggregate supply curve? The long-run aggregate supply curve
A) is vertical because an equal change in all prices and wages leaves output unaffected.
B) is positively sloped because price expectations and wages tend to be fixed in the long run.
C) shifts right when the government raises the minimum wage.
D) shifts left when the natural rate of unemployment falls.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical because in the long run, changes in prices and wages have fully adjusted and there are no longer any output effects. Thus, an equal change in all prices and wages leaves output unaffected.

Which of the Following Statements Is True Regarding the Long-Run