Which of the following statements is FALSE?
A)The aggregate demand curve is downward sloping.
B)The long run aggregate demand curve is upward sloping.
C)The short-run aggregate supply curve is upward sloping.
D)The long-run aggregate supply curve is vertical.

Question

Quizplus · Accepted Answer

The long run aggregate demand curve is actually vertical, not upward sloping. In the long run, changes in the price level do not affect the level of real output because factors of production, such as labor and capital, can adjust to changes in prices. Therefore, the long run aggregate demand curve is essentially a representation of the economy's potential output at different price levels.

Which of the Following Statements Is FALSE