The economy's long-run AS curve assumes that wages and other resource prices
A) eventually rise and fall to match upward or downward changes in the price level.
B) are ﬂexible upward but inﬂexible downward.
C) rise and fall more rapidly than the price level.
D) are relatively inﬂexible both upward and downward.

Question

Quizplus · Accepted Answer

The long-run aggregate supply (AS) curve assumes that wages and other resource prices will adjust to changes in the price level, ensuring that the economy operates at its full employment level of output in the long run, regardless of the price level. This flexibility allows the economy to adjust to changes over time.

The Economy's Long-Run AS Curve Assumes That Wages and Other