The Long-Run Aggregate Supply Curve Is Vertical,reflecting the Fact That

question 25

Multiple Choice

The long-run aggregate supply curve is vertical,reflecting the fact that

• A)changes in price have no effect on output in the long run.In the long run,the price of goods and the price of resources move together and firms have no incentive to change their output.
• B)fluctuations in inflation cannot be anticipated in the long run,so future prices have no effect on output.
• C)changes in price affect output a lot in the long run because in the long run firms can adjust factory sizes to meet changing demand conditions.
• D)changes in price have a large effect on output because they lead to highly variable interest rates,and business is hard to conduct under those circumstances.

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