The long-run aggregate supply curve (LRAS) is represented by a(n) ____ curve with respect to the CPI.
A) horizontal
B) upward-sloping
C) downward-sloping
D) vertical

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve (LRAS) is vertical with respect to the CPI, indicating that there is a fixed level of potential output in the long run regardless of changes in the price level. This is because in the long run, all inputs are variable and can be adjusted to their optimal level, allowing the economy to produce at its potential output.

The Long-Run Aggregate Supply Curve (LRAS) Is Represented by A(n)