The LRAS curve is ____ with real output levels that ____.
A)upward sloping; vary positively with the price level
B)upward sloping; vary negatively with the price level
C)vertical; are equal to the natural level of real output at all price levels
D)vertical; can be either greater than or less than the natural level of real output

Question

The LRAS curve is ____ with real output levels that ____.
A)​upward sloping; vary positively with the price level
B)​upward sloping; vary negatively with the price level
C)​vertical; are equal to the natural level of real output at all price levels
D)​vertical; can be either greater than or less than the natural level of real output

Quizplus · Accepted Answer

LRAS (long run aggregate supply) curve is vertical as it represents the potential output of an economy when all its factors of production are utilized at their optimal level. The natural level of real output is the level of output that an economy can produce in the long run when its factors of production are efficiently utilized. Therefore, the LRAS curve is vertical at the natural level of real output, and it does not vary with changes in the price level. Hence, option C is the correct choice.

The LRAS Curve Is ____ with Real Output Levels That