Question

"The long-run aggregate supply curve": 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.

Answer 1

Answer:

c) shows prices, wages, and interest rates to be inflexible.            

Explanation:

A long-run aggregate supply curve, which is also known as LRAS is a concept which shows the output of goods and the services which an economy is able to produce using all the factors of its production and hence when it is operating at a full employment.

It is determined by a vertical line which sets to the real output level, thus corresponding to the fully employed economy. The vertical curve indicated that the output is not influenced or affected by any changes in price level in the long run.

When there is an economic growth, the LRAS curve shifts outward.

Hence the correct option is (c).