The long-run aggregate supply curve is
A) horizontal.
B) vertical.
C) upward sloping.
D) downward sloping.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical because in the long run, all factors of production (including capital and labor) are assumed to be fully utilized and the economy operates at its potential output. This means that changes in the price level have no effect on the economy's output in the long run, as the economy's productive capacity is fixed.

The Long-Run Aggregate Supply Curve Is