The long-run aggregate supply curve shows the relationship between the ________ and ________.
A)inflation rate; quantity of real GDP demanded
B)real interest rate; quantity of real GDP supplied
C)nominal interest rate; quantity of real GDP supplied
D)price level; quantity of real GDP supplied

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve shows the relationship between the price level and the quantity of real GDP supplied. In the long run, the economy produces at its potential, so changes in the price level do not affect the quantity of real GDP supplied. Therefore, the long-run aggregate supply curve is a vertical line at the economy's potential output level.

The Long-Run Aggregate Supply Curve Shows the Relationship Between the ________