Explain Why the Long-Run Aggregate Supply (LAS)curve Is Vertical

question 170

Essay

Explain why the long-run aggregate supply (LAS)curve is vertical.What determines the position of the LAS curve?

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Definitions:

Federal Budgets

Annual financial statements representing the government's projected revenue and spending, outlining fiscal policies and priorities at the federal level.

Fiscal Policy

Government policies concerning taxation and spending to influence economic conditions, including aggregate demand.

Crowding Out

A situation where increased public sector spending leads to a reduction in private sector spending, which can dampen or negate the intended stimulative effect of the government's expenditures.

Investment Spending

Expenditure on capital goods including buildings, machinery, and equipment, which is intended to increase future production.