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24 August, 06:39

Which of the following is true? Select one: a. If the economy is close to capacity, with resources almost fully employed, the AS curve will be flat b. If the economy is in a recession, with idle resources, the AS curve will be steep c. If the economy is at full capacity, then the AS curve will be vertical. d. None of the above

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  1. 24 August, 09:28
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    Correct option is C.

    If the economy is at full capacity, then the AS curve will be vertical

    Explanation:

    The long-run aggregate supply curve is perfectly vertical, which reflects economists' belief that the changes in aggregate demand only cause a temporary change in an economy's total output. For the short-run aggregate supply, the quantity supplied increases as the price rises.

    The full capacity AS curve is a long-run AS curved and it is vertical as the potential output level is denoted by it with the fully employed resources.
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Home » Business » Which of the following is true? Select one: a. If the economy is close to capacity, with resources almost fully employed, the AS curve will be flat b. If the economy is in a recession, with idle resources, the AS curve will be steep c.
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