Which statement best characterizes the long-run aggregate-supply curve?
A) It is horizontal.
B) It shows a positive relationship between price level and output.
C) It demonstrates the importance of money in the economy.
D) It shows that money does not influence real GDP in the long run.

Question

Quizplus · Accepted Answer

The long-run aggregate-supply curve is vertical, indicating that changes in the price level do not affect the quantity of goods and services the economy is capable of producing, hence showing that money does not influence real GDP in the long run.

Which Statement Best Characterizes the Long-Run Aggregate-Supply Curve