The long-run aggregate supply curve is vertical because

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The question asks why the long-run aggregate supply (LRAS) curve is vertical.
Option a: 'wages, prices, and interest rates are not flexible in the long run.' This is incorrect because, in the long run, many prices and wages, including interest rates, are flexible and adjust to equilibrate the economy. The lack of flexibility would not produce a vertical LRAS.
Option b: 'it incorporates the assumptions of Keynesian theory.' This is not accurate for the LRAS being vertical. Keynesian theory typically emphasizes price and wage stickiness in the short run, whereas the vertical LRAS aligns more with classical assumptions of flexible prices and full employment output in the long run.
Option c: 'the economy will gravitate to the position of full employment when all variables are flexible.' This statement captures the core idea: in the long run, with flexible prices and inputs, the economy operates at its potential output, i.e., full employment, making the LRAS vertical.
Option d: 'many inputs are fixed.' This describes short-run constraints rather than the long-run behavior. In the long run, inputs are variable, not fixed, so this would not explain a vertical LRAS.

ECON 103 AL1/AL2 SP25: Macroeconomic Principles (Vazquez, J)

The long-run aggregate supply curve is vertical because

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Similar Questions

Which of the following would cause the change shown in the diagram?

The long-run aggregate supply curve is vertical at the level of output:

In the long run, the output of the economy:

In countries that have high minimum wages and require a lengthy and costly process to get permission to open a business,

In the figure above, what do the classical/neoclassical economists suggest in terms of achieving full employment in the Long Run?

3. Which of the following describe a long-run aggregate supply curve. a. A vertical line. b. The price level is fixed. c. Output prices are flexible, but input prices are fixed. d. A horizontal line. e. An upsloping curve. f. Output is fixed.

Figure 33-5. Refer to Figure 33-5. The appearance of the long-run aggregate-supply (LRAS) curve

The _____ curve is vertical at full employment.

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ECON 103 AL1/AL2 SP25: Macroeconomic Principles (Vazquez, J)

The long-run aggregate supply curve is vertical because

View Explanation

Log in for full answers

Similar Questions

Which of the following would cause the change shown in the diagram?

The long-run aggregate supply curve is vertical at the level of output:

In the long run, the output of the economy:

In countries that have high minimum wages and require a lengthy and costly process to get permission to open a business,

In the figure above, what do the classical/neoclassical economists suggest in terms of achieving full employment in the Long Run?

3. Which of the following describe a long-run aggregate supply curve. a. A vertical line. b. The price level is fixed. c. Output prices are flexible, but input prices are fixed. d. A horizontal line. e. An upsloping curve. f. Output is fixed.

Figure 33-5. ​ Refer to Figure 33-5. The appearance of the long-run aggregate-supply (LRAS) curve

The _____ curve is vertical at full employment.

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Figure 33-5. Refer to Figure 33-5. The appearance of the long-run aggregate-supply (LRAS) curve