The long-run aggregate supply curve is vertical if
A) wages and other costs fully adjust to changes in prices in the long-run.
B) the government follows optimal fiscal policy.
C) technology is fixed.
D) the Fed follows optimal monetary policy.

Question

Quizplus · Accepted Answer

The long-run aggregate supply curve is vertical because, in the long run, wages and other costs adjust to changes in prices, meaning the economy's output is determined by its resources, technology, and institutions, not by the price level.

The Long-Run Aggregate Supply Curve Is Vertical If