In the long run,the aggregate supply curve is vertical because
A) in the long run, potential output is less than actual output.
B) input prices and output prices are unaffected by changes in aggregate demand.
C) aggregate demand becomes horizontal.
D) input prices change by the same proportion as product prices, leaving output levels unchanged.
E) excess capacity allows firms more resource flexibility.

Question

Quizplus · Accepted Answer

In the long run, input prices adjust to changes in output prices, meaning that any increase in aggregate demand will not affect the level of output, as the economy is operating at its full potential output.

In the Long Run,the Aggregate Supply Curve Is Vertical Because