We distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve.In the long run
A) technology is fixed but not in the short run.
B) the price level is constant but in the short run it fluctuates.
C) the aggregate supply curve is horizontal while in the short run it is upward sloping.
D) real GDP equals potential GDP.

Question

Quizplus · Accepted Answer

In the long run, real GDP equals potential GDP, as all factors of production are assumed to be fully utilized and the economy is operating at its natural level of output. In contrast, the short-run aggregate supply curve can be upward sloping, indicating that increases in the price level can lead to higher levels of output due to factors such as sticky wages or prices. Technology can also change in the long run, but this would shift the long-run aggregate supply curve rather than change its shape. The price level can also fluctuate in the long run, but this would only affect movements along the long-run aggregate supply curve rather than its position.

We Distinguish Between the Long-Run Aggregate Supply Curve and the Short-Run