The long-run aggregate supply curve is
A) horizontal at the full-employment level of real Gross Domestic Product (GDP).
B) vertical at the full-employment level of real Gross Domestic Product (GDP).
C) sloping upward due to the effects of price level changes on real Gross Domestic Product (GDP).
D) the same as the short run aggregate supply (SRAS) curve.

Question

Quizplus · Accepted Answer

In the long run, all input prices can adjust to changes in the price level, meaning that the level of real GDP produced by the economy is not affected by changes in the price level. Therefore, the long-run aggregate supply curve is vertical at the full-employment level of real GDP.

The Long-Run Aggregate Supply Curve Is