Drawing the LRAS curve as a thick line indicates that there is a range of levels of
A) output that are compatible with inflation rate stability.
B) inflation that are compatible with output stability.
C) planned aggregate expenditure that are compatible with GDP growth rate stability.
D) consumption that are compatible with planned aggregate expenditure stability.
E) output that are compatible with consumption stability.

Question

Quizplus · Accepted Answer

The LRAS curve represents the economy's potential output, meaning the level of output that can be sustained in the long run given the available resources and technology. When the LRAS curve is drawn as a thick line, it indicates that there is a range of output levels that can be achieved without causing inflation or deflation, therefore, ensuring stability in the inflation rate.

Drawing the LRAS Curve as a Thick Line Indicates That