When the price level changes, this: decreases the level of aggregate supply in the long run. increases the level of aggregate supply in the long run. does not affect the level of aggregate supply in the long run. decreases the level of aggregate supply in the long run only at very high levels of output. increases the level of aggregate supply in the long run only at very high levels of output.
Question
When the price level changes, this:
decreases the level of aggregate supply in the long run.
increases the level of aggregate supply in the long run.
does not affect the level of aggregate supply in the long run.
decreases the level of aggregate supply in the long run only at very high levels of output.
increases the level of aggregate supply in the long run only at very high levels of output.
Solution
When the price level changes, this:
does not affect the level of aggregate supply in the long run.
Here's why:
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The long-run aggregate supply (LRAS) curve is vertical, indicating that in the long run, the economy's output (or aggregate supply) is determined by factors such as technology, resources, and the labor force, not by the price level.
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This means that changes in the price level do not affect the level of aggregate supply in the long run. Even if prices increase or decrease, the economy's potential output remains the same in the long run.
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Therefore, the correct answer is: does not affect the level of aggregate supply in the long run.
Similar Questions
How do shifts in aggregate demand and aggregate supply affect the economy's output and price level in the short run and the long run?
The level of long-run aggregate supply is affected by all of the following except:Question 5Answera.changes in the capital stock.b.changes in the number of workers.c.changes in the price level.d.changes in the technology.
Explain why, in the long run, a change in prices has no impact on output. What impactdoes aggregate demand have in determining output in the long run?
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An increase in aggregate demand causes an increase in ________ only in the short run, but causes an increase in ________ in both the short run and the long run. a. the price level; real GDP b. real GDP; the price level c. real GDP; real GDP d. the price level; the price level
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