which of the following is true about the long-run aggregate supply curve?it is vertical at the level of potential gdpit does not shift in response to temporary changes in aggregate demandit shows the relationship between the price level and real gdp when wages and other costs are at an equilibrium level.all the above
Question
which of the following is true about the long-run aggregate supply curve?it is vertical at the level of potential gdpit does not shift in response to temporary changes in aggregate demandit shows the relationship between the price level and real gdp when wages and other costs are at an equilibrium level.all the above
Solution
All of the above statements are true about the long-run aggregate supply curve.
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It is vertical at the level of potential GDP: This is because in the long run, the economy's output is determined by its productive capacity, not by the price level.
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It does not shift in response to temporary changes in aggregate demand: In the long run, changes in aggregate demand only affect the price level, not the level of output.
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It shows the relationship between the price level and real GDP when wages and other costs are at an equilibrium level: In the long run, wages and other costs adjust to changes in the economy, so the long-run aggregate supply curve shows the level of output that can be produced at different price levels when these costs are at their equilibrium levels.
Similar Questions
we distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve. in the long runtechnology is fixed but not in the short runthe price level is constant but in the short run it fluctuatesreal gdp equals potential gdpthe aggregate supply curve is horizontal while in the short run it is upward sloping.
which of the following is true about the long-run aggregate supply curve?
What shape is the long-run aggregate supply curve? vertical at the value of potential real GDP downward-sloping vertical at the value of potential nominal GDP upward-sloping but not vertical vertical at the value of maximum real GDP
The long-run aggregate supply curve is vertical because in the long run:Choose one answer from the options below.technological progress outpaces raises in nominal wages.all factors of production increase.the price of labor is flexible, while the price of physical capital is fixed.all prices are flexible.
What does the short-run aggregate supply curve show?Group of answer choicesThe relationship between the price level and the quantity of real GDP suppliedThe relationship between the unemployment rate and real GDPThe desired level of national expenditure at different price levelsThe relationship between labour supplied and the average wage rate
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