The "long-run aggregate supply curve," vertical at Y^*,shows that A)potential output will rise as prices rise. B)potential output will fall as prices rise. C)potential output is compatible with any price level. D)potential output is compatible with one particular price level. E)prices will always rise in the long run.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical, indicating that potential output (or the full employment level of output) is not affected by changes in the price level, thus it is compatible with any price level.

The "Long-Run Aggregate Supply Curve," Vertical at Y*,shows That

The "Long-Run Aggregate Supply Curve," Vertical at Y^*,shows That