A vertical long-run aggregate supply curve indicates that
A) an increase in the price level will not expand an economy's output capacity in the long run.
B) outputs greater than the long-run supply constraint cannot be achieved.
C) an increase in the price level will permit the economy to achieve a higher level of output.
D) an increase in the price level will promote technological change and more rapid economic growth.

Question

Quizplus · Accepted Answer

A vertical long-run aggregate supply curve indicates that an increase in the price level will not expand an economy's output capacity in the long run. This is because the long-run supply is determined by factors such as capital stock, technology, and labor force, which cannot be changed in the short run. Therefore, any increase in demand will only lead to a rise in prices and not an increase in output.

A Vertical Long-Run Aggregate Supply Curve Indicates That