The long-run aggregate supply curve shows the relationship between the ________ and ________.
A)inflation rate; quantity of real GDP demanded
B)real interest rate; quantity of real GDP supplied
C)nominal interest rate; quantity of real GDP supplied
D)price level; quantity of real GDP supplied
E)inflation rate; labour supply

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve shows the relationship between the overall price level (inflation) and the quantity of real GDP supplied in the long-run, when all factors of production are fully utilized. Changes in nominal interest rates and labour supply can affect the short-run aggregate supply curve, but not the long-run aggregate supply curve.

The Long-Run Aggregate Supply Curve Shows the Relationship Between the ________