If the national output cannot be increased unless the productive capacity or potential GDP increases, the aggregate supply curve is:
A)downward-sloping.
B)U-shaped.
C)vertical.
D)upward-sloping.
E)horizontal.

Question

Quizplus · Accepted Answer

If the productive capacity or potential GDP is the maximum output that an economy can produce with its available resources, then the aggregate supply curve would be vertical because any increase in demand would not lead to an increase in output. Therefore, the national output cannot be increased unless a country's productive capacity increases, represented by a shift in the aggregate supply curve.

If the National Output Cannot Be Increased Unless the Productive