Consider the AD/AS model. Since output in the long run is determined by Y^*, the only role of the AD curve is to determine the price level. This is true because the A)aggregate demand curve is horizontal. B)Y^*depends on the price level. C)AS curve is upward sloping. D)aggregate demand curve is vertical. E)Y^*is independent of the price level.

Question

Quizplus · Accepted Answer

In the long run, output (Y*) is determined by factors such as technology and resources, not by the price level, making it independent of the AD curve.

Consider the AD/AS Model