The Long-Run Aggregate Supply Curve Is Vertical

question 197

Multiple Choice

The long-run aggregate supply curve is vertical:

• A)because the rate of inflation is steady in the long run.
• B)because resource prices eventually catch up with product prices.
• C)because product prices always increase at a faster rate than resource prices.
• D)only when the money supply increases at the same rate as real GDP.

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Definitions:

Direct Labor Costs

These refer to the expenses associated with paying workers who directly manufacture or produce the goods and services.

Work in Process Inventory

Represents goods that are partially completed in a manufacturing process but are not yet finished products.

Cash Account

An account that records the amount of cash transactions a company engages in over a period.

Direct Labor Costs

The compensation and perks provided to workers directly engaged in manufacturing products or delivering services.