Figure 20-2. -Refer to Figure 20-2. The appearance of the long-run aggregate-supply (LRAS) curve A)is inconsistent with the concept of monetary neutrality. B)is consistent with the idea that point A represents a long-run equilibrium but not a short-run equilibrium when the relevant short-run aggregate-supply curve is AS₁. C)indicates that Y₁ is the natural rate of output. D)All of the above are correct.

Question

Quizplus · Accepted Answer

The long-run aggregate-supply (LRAS) curve is vertical, indicating that the economy's output is determined by factors such as technology and resources, not by the price level. This suggests that Y₁ is the natural rate of output, consistent with the concept of monetary neutrality.

Figure 20-2. -Refer to Figure 20-2. the Appearance of the Long-Run Aggregate-Supply