Which of the following best describes the long run in terms of aggregate supply?
A) The long-run aggregate supply curve is horizontal.
B) The long-run aggregate supply curve is vertical.
C) The long-run aggregate supply slopes upwards, but is NOT vertical.
D) The long-run aggregate supply slopes downwards.

Question

Which of the following best describes the long run in terms of aggregate supply?  
A) The long-run aggregate supply curve is horizontal. 
B) The long-run aggregate supply curve is vertical. 
C) The long-run aggregate supply slopes upwards, but is NOT vertical. 
D) The long-run aggregate supply slopes downwards.

Quizplus · Accepted Answer

In the long run, all inputs are flexible, including capital and technology. Thus, the long-run aggregate supply curve is vertical, indicating that changes in price level do not affect overall output in the economy. Instead, the economy adjusts to potential output, defined as the level of output that can be produced with all inputs at their long-run equilibrium levels.

Which of the Following Best Describes the Long Run in Terms