The long-run aggregate supply curve uses the classical assumptions that all variables are _____ in the long run and that long-run equilibrium occurs at _____.
A) flexible; full employment
B) flexible; less than full employment
C) fixed; less than full employment
D) fixed; full employment

Question

Quizplus · Accepted Answer

In the long run, classical economics assumes that all variables are flexible, allowing the economy to adjust to full employment, where resources are fully utilized.

The Long-Run Aggregate Supply Curve Uses the Classical Assumptions That