When talking about aggregate supply, it is necessary to
A) focus on the short run.
B) focus on the long run.
C) distinguish between long-run aggregate supply and short-run aggregate supply.
D) distinguish between long-run full employment and short-run full employment.

Question

Quizplus · Accepted Answer

Distinguishing between long-run aggregate supply (LRAS) and short-run aggregate supply (SRAS) is crucial because they are affected by different factors and have different implications for the economy. LRAS reflects the economy's maximum sustainable output level, determined by resources, technology, and institutions, while SRAS can fluctuate due to temporary supply shocks or demand changes.

When Talking About Aggregate Supply, It Is Necessary to