asked 175k views
1 vote
the aggregate supply curve is a. vertical in the long run and slopes upward in the short run. b. upward sloping in the long run and vertical in the short run. c. vertical in the short run and in the long run. d. upward sloping in the short run and in the long run.

asked
User Igal K
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1 Answer

6 votes

Final answer:

The aggregate supply curve is vertical in the long run and slopes upward in the short run, reflecting the different economic behaviors in these periods. The correct option is option (a).

Step-by-step explanation:

The correct answer to the question regarding the characteristics of the aggregate supply curve is vertical in the long run and slopes upward in the short run. In the short run, the aggregate supply curve is upward-sloping because as the price level for outputs increases, while the price level of inputs remains fixed, there is an opportunity for additional profits, which encourages more production. This relationship is depicted by the short run aggregate supply (SRAS) curve.

However, in the long run, aggregate supply is shown by a vertical line at the potential GDP level, which represents the maximum level of output the economy can produce with its existing levels of workers, physical capital, technology, and economic institutions.

answered
User Ashutosh A
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7.7k points
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