Question

The economy's long-run AS curve assumes that wages and other resource prices _____. rev: 06_12_2018 Multiple Choice eventually rise and fall to match upward or downward changes in the price level are flexible upward but inflexible downward rise and fall more rapidly than the price level are relatively inflexible both upward and downward

Answer 1

Answer: eventually rise and fall to match upward or downward changes in the price level.

Explanation:

Long-run aggregate supply (LRAS) curve simply shows the long-term output for a country. In the long-run, it should be noted that the aggregate supply curve is vertical, which shows that the changes in the aggregate demand will only result in a temporary change with regards to the total output of the economy.

The aggregate supply curve of an economy assumes that the wages and other resource prices eventually rise and fall to match upward or downward changes in the price level.

Therefore, the correct option is A.