What is sometimes called the "long-run aggregate supply curve" shows the relationship between the price level and aggregate supply over a time period long enough to permit
A)changes in the capital stock.
B)wages and other factor prices to adjust.
C)changes in technology to occur.
D)changes in the size of the resource base to occur.
E)population to increase.

Question

Quizplus · Accepted Answer

The "long-run aggregate supply curve" shows the relationship between the price level and aggregate supply over a time period long enough to permit wages and other factor prices to adjust. This means that the economy has had enough time to adjust to changes in input prices and therefore the long-run aggregate supply curve is usually depicted as a vertical line, indicating that potential output is independent of changes in the price level in the long run.

What Is Sometimes Called the "Long-Run Aggregate Supply Curve" Shows