What does the long-run aggregate supply relationship refer to?
A)a time period long enough for the prices of both outputs and inputs to adjust to changes in the economy
B)a time period in which input prices can change, but output prices have not had time to adjust
C)a time period in which output prices can change but input prices have not had time to adjust
D)any time period of more than a year

Question

Quizplus · Accepted Answer

The long-run aggregate supply relationship refers to a time period long enough for the prices of both outputs and inputs to adjust to changes in the economy. In the long run, all prices can adjust, and the economy can reach its potential output level. This is because in the long run, factors of production, such as labor, capital, and technology, are variable, and can adjust to changes in demand and supply. Therefore, the long-run aggregate supply curve is vertical at the potential output level, indicating that changes in the price level do not affect the level of output in the long run.

What Does the Long-Run Aggregate Supply Relationship Refer To