A vertical aggregate supply curve
A)Implies that supply-side policies will have no effect on the macro equilibrium.
B)Implies that aggregate demand shifts have no impact on output.
C)Is likely in the short run.
D)Reflects the inflexibility of prices and wages.

Question

Quizplus · Accepted Answer

A vertical aggregate supply curve implies that the economy is at its full capacity, meaning output cannot increase regardless of changes in aggregate demand. This means shifts in aggregate demand affect prices but not output.

A Vertical Aggregate Supply Curve