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The vertical long-run aggregate supply curve implies that: a. changes in aggregate demand will...

Question:

The vertical long-run aggregate supply curve implies that:

a. changes in aggregate demand will have no effect on the price level.

b. the short-run aggregate supply curve is also vertical.

c. natural or full-employment real GDP does not depend on the price level in the long run.

d. natural or full-employment real GDP is the same as equilibrium real GDP in the short run.

Aggregate Supply

Aggregate supply is the total amounts of commodities and services which are produced and sold in the economy at a specific period. Aggregate supply is a macroeconomic concept as it includes the supply curve of all the individual firms in the industry.

Answer and Explanation: 1

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The correct answer is c: the natural or full-employment real GDP is independent of the price level in the long run.

In the long run, which is a...

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Aggregate Supply in the Economy: Definition and Determinants

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Chapter 7 / Lesson 7
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Learn the definitions of aggregate supply and aggregate demand. See the determinants of aggregate supply, the determinants of aggregate demand, and what causes them to shift.


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