Which of the following statements is true?
A) The short-run aggregate supply curve is downward sloping.
B) The short-run aggregate supply curve is vertical.
C) The potential output curve is vertical.
D) The potential output curve is sloping upward to the right.

Question

Quizplus · Accepted Answer

The potential output curve is vertical because it represents the maximum amount of goods and services an economy can produce when it is most efficient, regardless of the level of prices. This does not change in the short run, hence the vertical line.

Which of the Following Statements Is True