Exhibit 14-6 Aggregate supply curve

-In Exhibit 14-6,the aggregate supply curve becomes vertical at GDP = $1,200 because:
A) there are no more workers available at any wage rate to increase real GDP.
B) the price level remains constant.
C) the only workers available would demand higher wage rates.
D) the economy is experiencing low employment and low production.
E) the Treasury is no longer allowed to explain away the deficit with creative accounting

Question

Exhibit 14-6 Aggregate supply curve
 
-In Exhibit 14-6,the aggregate supply curve becomes vertical at GDP = $1,200 because:
A) there are no more workers available at any wage rate to increase real GDP. 
B) the price level remains constant. 
C) the only workers available would demand higher wage rates. 
D) the economy is experiencing low employment and low production. 
E) the Treasury is no longer allowed to explain away the deficit with creative accounting

Quizplus · Accepted Answer

A vertical aggregate supply curve indicates that the economy has reached its full employment level, meaning there are no more workers available at any wage rate to increase real GDP.

Exhibit 14-6 Aggregate Supply Curve