When the aggregate supply curve is ________ any increase in the price level will not cause an increase in aggregate output.
A) horizontal
B) vertical
C) upward sloping
D) downward sloping

Question

Quizplus · Accepted Answer

When the aggregate supply curve is perfectly vertical (or close to it), it implies that the economy has reached its full potential output level. This means that any increase in the price level will not cause an increase in aggregate output as the economy is already producing its maximum level of goods and services.

When the Aggregate Supply Curve Is ________ Any Increase in the Price