The long-run aggregate supply curve is a vertical line passing through
A)the natural rate of output.
B)the natural-rate price level.
C)the actual rate of unemployment.
D)the expected rate of inflation.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve represents the potential output of an economy when all factors of production are at their natural level. This means that the economy is producing at its maximum sustainable level and there is no cyclical unemployment. Therefore, in the long run, the aggregate supply curve is vertical and passes through the natural rate of output. Choices B, C, and D are incorrect because they do not represent the long-run aggregate supply curve.

The Long-Run Aggregate Supply Curve Is a Vertical Line Passing