The long run aggregate supply curve is
A) independent of prices and is vertical at the nation's natural rate of output
B) dependent on prices and is vertical at the nation's natural rate of output
C) independent of prices and is horizontal at the nation's natural rate of output
D) dependent on prices and is horizontal at the nation's natural rate of output

Question

Quizplus · Accepted Answer

The long run aggregate supply curve is independent of prices and is vertical at the nation's natural rate of output because in the long run, all factors of production can be adjusted to meet the economy's potential output and the natural rate of unemployment. Therefore, changes in prices do not affect the economy's potential output.

The Long Run Aggregate Supply Curve Is