The Long- Run Aggregate Supply Curve Is Vertical Because

question 154

Multiple Choice

The long- run aggregate supply curve is vertical because

• A)at full employment prices are stable.
• B)there is no cyclical inflation.
• C)the money wage rate increases faster than the price level.
• D)potential GDP is independent of the price level.

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Definitions:

Variable Cost Per Unit

The cost that changes in proportion to changes in the level of output or activity.

Income From Operations

The profit realized from a business's ongoing core business operations, excluding deductions of interest and taxes.

Break-even Point

The point at which total costs and total revenue are equal, resulting in no net loss or gain.

Variable Cost

Costs that vary directly with the level of production or output. These are often raw material and labor costs that increase or decrease with the volume of production.