Which of the following statements best categorizes the LRAS curve.
A)Vertical at the current level of real output.
B)Depends on the position of the AD curve.
C)The full-employment and full adjustment level of real output of goods and services in the economy.
D)Depends on the aggregate price level in the economy.

Question

Quizplus · Accepted Answer

The LRAS (long-run aggregate supply) curve represents the full-employment and full adjustment level of real output of goods and services in the economy, regardless of the aggregate price level. It is not affected by the position of the AD (aggregate demand) curve, as it represents the potential output of the economy in the long run. Therefore, option A and B are incorrect. Option D is also incorrect as the LRAS curve represents the economy's productive capacity, not the aggregate price level.

Which of the Following Statements Best Categorizes the LRAS Curve