The long-run aggregate supply curve is vertical because
A) the economy has yet to use all its available resources.
B) the economy has reached its potential real Gross Domestic Product (GDP) and is at full employment.
C) the economy has contracted.
D) the economy has large numbers of unemployed.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical because, in the long run, the economy has reached its potential real Gross Domestic Product (GDP) and is at full employment. This means that all available resources are being used efficiently and there is no room for further expansion of output without causing inflation.

The Long-Run Aggregate Supply Curve Is Vertical Because