If the price level falls by 5%,then all else being equal,the long-run aggregate supply curve will:
A) remain unchanged.
B) shift to the right to reflect an increase in output of 5%.
C) shift to the right to reflect an increase in output of more than 5%.
D) shift to the left to reflect a decrease in output of 5%.
E) shift to the left to reflect a decrease in output of more than 5%.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve represents potential output in the economy, which is determined by factors such as technology, capital, and labor. A decrease in price level does not affect these underlying factors, therefore the long-run aggregate supply curve remains unchanged.

If the Price Level Falls by 5%,then All Else Being