Because the Long Run Aggregate Supply Curve Is Vertical at the Full

question 173

Multiple Choice

Because the long run aggregate supply curve is vertical at the full employment level of GDP, then this would imply that the long run aggregate supply curve:

• A) decreases as the price level increases.
• B) is independent of changes in the price level.
• C) shifts to the right when the price level increases.
• D) increases as the price level increases.

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Definitions:

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, excluding fixed overhead from inventory valuation.

Fixed Overhead

Recurring operating expenses that remain relatively constant regardless of the level of production or business activity.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Inventory

Products and items that a company keeps with the final intention of selling or further processing.