In the classical model, the aggregate supply curve is
A) upward sloping.
B) downward sloping.
C) horizontal.
D) vertical.

Question

Quizplus · Accepted Answer

In the classical model, the long-run aggregate supply curve (LRAS) is vertical, indicating that the level of output is determined by the economy's factors of production and technology. In the long run, changes in the money supply do not affect output, so the aggregate supply curve is vertical. This means that the economy's potential output is fixed and determined by the supply side of the economy.

In the Classical Model, the Aggregate Supply Curve Is