Explain why the long-run aggregate supply curve is vertical
What will be an ideal response?
In the long run, the economy operates at full employment, and changes in the price level do not affect employment. Because the level of full-employment output does not depend on the price level, long-run aggregate supply is unaffected by the price level, and so is vertical.
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A natural resource, such as fishing territories, is considered an example of
A) both land and labor. B) land, labor, capital and entrepreneurship. C) land only. D) only capital.
Peg's Kegs sells kegs in a perfectly competitive market. Because low demand forced price below average variable cost, Peg has made the short-run decision to shut down. Her current loss is
a. zero b. greater than if she had kept operating c. the same as the losses she was incurring while operating d. equal to fixed cost e. less than her total revenue
When drawing a demand curve,
a. demand is measured along the vertical axis, and price is measured along the horizontal axis. b. quantity demanded is measured along the vertical axis, and price is measured along the horizontal axis. c. price is measured along the vertical axis, and demand is measured along the horizontal axis. d. price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis.
In the United States, the Great Depression peaked in:
a. 1900 b. 1933 c. 1945 d. 1981