Which of the following statements is true regarding the long-run aggregate supply curve? The long-run aggregate supply cruve ?
Correct answer: A. Is vertical because an equal change in all prices and wages leaves output unaffected
- A. Is vertical because an equal change in all prices and wages leaves output unaffected
- B. is positively sloped because price expectations and wages tend to be fixed is the long run
- C. shifts right when the government raises the minimum wage
- D. shifts left when the natural rate of unemployment falls
Explanation
Long-run aggregate supply is vertical because changes in the overall price level and wages do not alter the economy’s real productive capacity. Output is determined by labour, capital, technology, and resources rather than the price level.
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