The Economy's Long Run Aggregate Supply Curve

question 74

Multiple Choice

The economy's long run aggregate supply curve

• A) is horizontal,indicating that the economy always reaches full employment in the long run.
• B) is vertical at the full-employment level of output,indicating that the price level is constant in the long run.
• C) is horizontal,indicating that prices are constant in the long run.
• D) is vertical at the full-employment level of output,indicating that the economy always reaches full employment in the long run.
• E) is vertical at the zero budget deficit level of output.

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Definitions:

Work in Process Inventories

Inventories that consist of items currently under production but not yet completed or ready for sale.

Total Manufacturing Cost

The sum of all costs directly related to the production of goods, including materials, labor, and overhead expenses.

Cost of Goods Manufactured

The total cost of manufacturing goods during a specific period including materials, labor, and overhead.

Raw Materials

Basic substances in their natural, modified, or semi-processed state used as inputs for production.