ECONOMICS
AGGREGATE SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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a positive slope.
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an infinite slope.
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a negative slope.
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a zero slope.
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Detailed explanation-1: -The long-run aggregate supply (LRAS) curve is a vertical line with an infinite slope, reflecting the independent relation between the price level and aggregate real production. A higher price level is associated with the same real production as a lower price level.
Detailed explanation-2: -The Slope of the Long-Run Aggregate Supply Curve The long-run aggregate supply curve is perfectly vertical; changes in aggregate demand only cause a temporary change in total output.
Detailed explanation-3: -The short-run aggregate supply curve is upward sloping while the long-run aggregate supply curve is vertical. The SRAS is upward sloping because of the misperceptions theory, the sticky wages theory, and the sticky prices theory.
Detailed explanation-4: -Key Takeaways The long-run aggregate supply curve is a vertical line at the potential level of output. The intersection of the economy’s aggregate demand and long-run aggregate supply curves determines its equilibrium real GDP and price level in the long run.
Detailed explanation-5: -The aggregate-demand curve slopes downward because a fall in the price level raises the overall quantity of goods and services demanded through the wealth effect, the interest-rate effect, and the exchange-rate effect.