Why Is the Long-Run Aggregate Supply Curve a Vertical Line

question 212

Multiple Choice

Why is the long-run aggregate supply curve a vertical line?

• A) At that level of real GDP, the unemployment rate is 0 percent.
• B) At that level of real GDP, the inflation rate is 0 percent.
• C) At that level of real GDP, the production costs are at their lowest level.
• D) At that level of real GDP, production costs have fully adjusted to price changes.

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Definitions:

Employment Flexibility

The adaptability of employment terms and conditions to meet both the employer's and employees' needs, including work hours, job duties, and location of work.

Pay Flexibility

The ability of employers to adjust wages based on market conditions, performance, or other factors.

Procedural Flexibility

The ability to adapt the processes and methods used in various situations, allowing for adjustments based on specific circumstances.

Labor-Management Cooperation

Describes initiatives and practices aimed at fostering collaborative relationships between employers and their workers to improve productivity and workplace harmony.