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

Question

Quizplus · Accepted Answer

According to the classical model, the aggregate supply curve is vertical in the long run, as the economy operates at its potential level of output regardless of changes in the price level. This is due to the assumption that all resources are fully employed in the long run, and any increase in aggregate demand will only lead to a temporary increase in prices, but not in output.

The Aggregate Supply Curve in the Classical Model Is