The long-run aggregate supply curve is vertical because, in the long run:
A) nominal wages are sticky and therefore output cannot respond to change in price.
B) the price level cannot change and therefore firms have no incentive to increase output.
C) the real wage is constant and therefore firms have no incentive to change output.
D) the real wage is zero and therefore no additional labor is available to produce extra output.

Question

Quizplus · Accepted Answer

In the long run, the economy is at full employment, and output is determined by factors like technology and resources, not by the price level. The real wage adjusts to ensure that labor supply equals labor demand, making the long-run aggregate supply curve vertical.

The Long-Run Aggregate Supply Curve Is Vertical Because, in the Long