Question

The belief that changes in price level have no effect on the long-run quantity of final goods and services the economy can produce is illustrated by the
A) upward-sloping aggregate demand curve.
B) downward-sloping aggregate supply curve.
C) long-run vertical aggregate supply curve.
D) short-run upward-sloping aggregate supply curve.

Answer 1

Answer:

C) long-run vertical aggregate supply curve.

Explanation:

Downward and Upward sloping aggregate demand curves will show how the dropping or rising of price level will affect the quantity of output demanded.

While long-run and short-run aggregate supply curves show how the price level relates to the quantity of production of goods and services. In short-run upward-sloping aggregate supply curve it shows the belief that “the quantity supplied increases when the price rises”.

While the long-run vertical aggregate supply curve shows the beliefs of economists that in long-run is only the labor, capital and technology that can affect the quantity of final goods and services that one economy can produce.