If input prices changed at exactly the same rate as output prices, the aggregate supply curve would be
A) vertical.
B) upward sloping.
C) horizontal.
D) downward sloping.

Question

Quizplus · Accepted Answer

If input prices change at the same rate as output prices, the cost of production relative to the selling price remains constant, implying that the quantity supplied does not change with the price level. This scenario results in a vertical aggregate supply curve, indicating that the total output supplied is unaffected by changes in the price level.

If Input Prices Changed at Exactly the Same Rate as Output