When is the aggregate supply curve vertical?
A)in the short and the long run
B)in neither the short run nor the long run
C)in the long run, but not in the short run
D)in the short run, but not in the long run

Question

Quizplus · Accepted Answer

In the short run, the aggregate supply curve is upward sloping, as prices of inputs may not adjust immediately to changes in output prices. However, in the long run, all input prices are flexible, and the aggregate supply curve becomes vertical. This is because output is determined by factors like capital, labor, technology, etc., which can be adjusted in the long run to meet changes in output prices.

When Is the Aggregate Supply Curve Vertical