The long-run aggregate supply curve: Question 15 options: a) is horizontal. b) shows the economy reaching an equilibrium at the natural rate of unemployment. c) shows prices, wages, and interest rates to be inflexible. d) can never shift.

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Miranda Suarez

25 September, 07:23

The long-run aggregate supply curve: Question 15 options: a) is horizontal. b) shows the economy reaching an equilibrium at the natural rate of unemployment. c) shows prices, wages, and interest rates to be inflexible. d) can never shift.

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Answers (1)

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Averie Robertson · Answer 1

The long-run aggregate supply curve "shows prices, wages, and interest rates to be inflexible".

Answer: Option C

Explanation:

The long-run aggregate supply graph is vertical, reflecting the views of economists that show variations in aggregate demand only affect the overall performance of the economy briefly. Only capital, labor, and technology influence cumulative output in the long run, because it is believed that everything in the economy is efficiently utilized.

If the output things influence in quantity, the long-run aggregate supply curve can change. While the short-run aggregate supply curve is influenced by the cost of production including subsidies, labor wages, taxation and production prices.