The long-run aggregate supply curve (LRAS) is:
A) a vertical curve that relates the level of real GDP produced to the price level in the long run.
B) an upward sloping curve that relates the level of real GDP produced to the price level in the long run.
C) an infinite curve that relates the level of real GDP produced to the price level in the long run.
D) none of the above are true.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve (LRAS) is a vertical curve that shows the relationship between the level of real GDP produced and the price level in the long run. This means that as the price level changes, the level of real GDP produced will remain the same in the long run. This is because in the long run, all inputs (including labor, capital, and technology) are variable, and changes in the price level do not affect the potential production capacity of the economy.

The Long-Run Aggregate Supply Curve (LRAS) Is