The long-run aggregate supply curve is vertical because potential real GDP is determined by resource availabilities and productivities.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve represents the economy's potential output level, which is determined by the stock of available resources and the level of technology. In the long run, changes in the price level do not affect the availability of resources, so the long-run aggregate supply curve is vertical at the potential output level.

The Long-Run Aggregate Supply Curve Is Vertical Because Potential Real