The long-run aggregate supply curve is vertical because
A) at full employment, prices are stable.
B) there is no cyclical inflation.
C) potential GDP is independent of the price level.
D) the money wage rate increases faster than the price level.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical because potential GDP is independent of the price level, indicating that in the long run, the total output of an economy is determined by its resources, technology, and institutions, not by the price level.

The Long-Run Aggregate Supply Curve Is Vertical Because