If potential GDP is equal to $600 billion,what does the long-run aggregate supply curve look like?
A)It is a horizontal line at $600 billion of GDP.
B)It is a vertical line at a level of GDP below $600 billion.
C)It is a vertical line at $600 billion of GDP.
D)It is a vertical line at a level of GDP above $600 billion.

Question

Quizplus · Accepted Answer

In the long run, the economy operates at potential GDP, which is represented by a vertical line on the aggregate supply curve. Therefore, the long-run aggregate supply curve will be a vertical line at the level of potential GDP, which is $600 billion in this case.

If Potential GDP Is Equal to $600 Billion,what Does the Long-Run