What is the difference between the short-run aggregate supply curve and the long-run aggregate supply curve?
A) Output varies with the price level in the short run but is constant in the long run.
B) Output varies in the opposite direction of the price level in the short run but is constant in the long run.
C) Output does not have enough time to vary in the short run but varies with the price level in the long run.
D) Output does not have enough time to vary in the short run but has a negative relationship with the price level in the long run.

Question

Quizplus · Accepted Answer

In the short run, output can vary as prices change due to factors like wage stickiness and menu costs. However, in the long run, output is determined by the economy's productive capacity (factors of production) and is not affected by the price level, leading to a vertical long-run aggregate supply curve.

What Is the Difference Between the Short-Run Aggregate Supply Curve