In terms of aggregate supply, the difference between the long run and the short run is that in the long run,
A) the price level is variable.
B) employment is variable.
C) real output is variable.
D) nominal wages and other input prices are fully responsive to price-level changes.

Question

Quizplus · Accepted Answer

In the long run, nominal wages and other input prices are fully responsive to price-level changes, meaning that they can adjust to changes in the overall price level. This leads to a shift in the short-run aggregate supply curve to the right, resulting in an increase in real output and a decrease in the price level. In contrast, in the short run, nominal wages and other input prices are not fully responsive to changes in the price level, resulting in a vertical short-run aggregate supply curve.

In Terms of Aggregate Supply, the Difference Between the Long