The Long-Run Aggregate Supply Curve Is Vertical Because

question 38

Multiple Choice

The long-run aggregate supply curve is vertical because

• A)potential GDP is independent of the price level.
• B)actual output can never exceed, even temporarily, the output rate implied by the economy's long-run aggregate supply curve.
• C)a vertical long-run aggregate supply curve indicates the maximum output rate that an economy can ever reach.
• D)a vertical long-run supply curve indicates that an increase in aggregate demand will lead to a larger real GDP, but not a larger nominal GDP.
• E)potential GDP never changes.

---

Definitions:

Epinephrine

Also known as adrenaline, it is a hormone and medication that plays a key role in the body's fight-or-flight response by increasing blood flow to muscles, output of the heart, pupil dilation, and blood sugar.

Endorphins

Neurotransmitters produced in the brain that act as natural painkillers and are also associated with feelings of pleasure.

GABA

Gamma-Aminobutyric acid, an inhibitory neurotransmitter in the brain that reduces neuronal excitability throughout the nervous system.

Hypnosis

A trance-like state of focused attention and heightened suggestibility, with diminished peripheral awareness, often used for therapeutic purposes.