Question

According to your text when the Long Run Aggregate Supply (LRAS) curve is vertical: a) We...

According to your text when the Long Run Aggregate Supply (LRAS) curve is vertical:
a) We are at Natural Unemployment
b) Full Employment has been reached
c) All of these
d) Rightward shifts in the Aggregate Demand Curve can only raise prices

Homework Answers

Answer #1

Answer - option (b) Full employment has been reached. In long run, the aggregate supply will be affected only by labor, capital and technology as other things except these is assumed to be used optimally. In full employment in the LRAS is vertical becuse this is the amount that is produced when price is fully adjusted. In short run as prices are sticky, producers react to the change in price level by changes their output. While in long run the prices are unstuck when they are fully adjusted to the economy and producers also produce efficient output with full employment of resources.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which of the following will most likely increase long-run aggregate supply? a. an increase in the...
Which of the following will most likely increase long-run aggregate supply? a. an increase in the rate of investment b. an increase in resource prices c. an increase in the minimum wage d. an increase in the expected inflation rate Suppose the economy is initially in long-run equilibrium and then it experiences a supply shock in the form of sharply higher energy prices. Which of the following is true? a. The short-run aggregate supply curve shifts leftward and the long-run...
The Long-Run Aggregate Supply (LRAS) curve reflects the natural level of output when there is no...
The Long-Run Aggregate Supply (LRAS) curve reflects the natural level of output when there is no frictional unemployment the level of output that will prevail in the long run as determined by the production function and factors of production the level of output that will prevail in the long run as determined by the quantity equation the level of output in the long run when the money supply is constant The Short-Run Aggregate Supply (SRAS) curve reflects the natural level...
When an economy operates at its long-run potential output level, a. aggregate demand will exceed aggregate...
When an economy operates at its long-run potential output level, a. aggregate demand will exceed aggregate supply in the goods and services market. b. unemployment will decline to an abnormally low rate that cannot be sustained in the long run. c. the actual rate of unemployment will exceed the natural rate of unemployment. d. the natural and actual rates of unemployment will be equal. If an economy is operating in the range where its aggregate supply curve is vertical, a....
Assume an economy is at​ long-run equilibrium. An inflationary gap results when the A. aggregate demand...
Assume an economy is at​ long-run equilibrium. An inflationary gap results when the A. aggregate demand curve shifts rightward and generates a movement along the​ short-run aggregate supply curve. B. aggregate demand curve shifts leftward and generates a movement along the​ long-run aggregate supply curve. C. aggregate demand curve shifts leftward and generates a movement along the​ short-run aggregate supply curve. D. aggregate demand curve shifts rightward and generates a movement along the​ long-run aggregate supply curve.
The change in natural rate of output alters the long-run aggregate-supply (LRAS) curve due to several...
The change in natural rate of output alters the long-run aggregate-supply (LRAS) curve due to several factors. Discuss.
When aggregate demand shifts left along the short-run aggregate supply curve, a. unemployment and prices fall....
When aggregate demand shifts left along the short-run aggregate supply curve, a. unemployment and prices fall. b. unemployment and prices rise. c. unemployment falls and prices rise. d. unemployment rises and prices fall.
19) The aggregate supply curve for the long run is: Potential output for the economy. the...
19) The aggregate supply curve for the long run is: Potential output for the economy. the full employment aggregate supply curve. Represents potential output, full employment output and is a vertical line. a vertical line when output is plotted against the price level. 21) When the Federal Reserve rescued Bear Stearns in March 2008 to avoid the banking crisis, the Fed was accused of engaging in Lender of last resort. Regulating the bank Moral suasion Moral hazard 22) All of...
11.   Demand-pull inflation occurs when the aggregate __________ curve shifts _______. A.   demand, right B.    demand, left C.    supply, right...
11.   Demand-pull inflation occurs when the aggregate __________ curve shifts _______. A.   demand, right B.    demand, left C.    supply, right D.   supply, left 12.   When the aggregate price level decreases, the resulting decrease in interest rates will most likely ___________ investment and _____________ consumption. A.   increase, increase B.    increase, decrease C.    decrease, increase D.   decrease, decrease 13.   The economy is operating at full capacity.  The long-run aggregate supply curve is __________.  In the long run, an increase in the aggregate price level will __________ output. A.   horizontal, increase B.    horizontal, not change C.    vertical, increase D.   vertical,...
Draw a basic short run aggregate supply (SRAS), aggregate demand (AD) and long-run aggregate supply curve...
Draw a basic short run aggregate supply (SRAS), aggregate demand (AD) and long-run aggregate supply curve (LRAS) that shows the economy in long-run equilibrium.
List the determinants of aggregate demand (AD shifters). List the determinants of short-run aggregate supply and...
List the determinants of aggregate demand (AD shifters). List the determinants of short-run aggregate supply and long-run aggregate supply. Why is the LRAS vertical? How does this relate to our natural rate of unemployment?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT
Active Questions
  • Distinguish between the typical roles of geologist and engineers in dealing with groundwater problems. How do...
    asked 22 minutes ago
  • 5) A rock is thrown directly southeast (45 degrees to S and E), at an initial...
    asked 25 minutes ago
  • If 133.2 kJ of heat are added to 5.80 × 102 g of water at 22.0°C,...
    asked 26 minutes ago
  • true/false An unweighted path length measures the number of edges in a graph. Breadth first search...
    asked 34 minutes ago
  • Give an example of the effect of interest rate changes on a fixed coupon bond, what...
    asked 42 minutes ago
  • Thirty-two small communities in Connecticut (population near 10,000 each) gave an average of x = 138.5...
    asked 46 minutes ago
  • The value of the integral   ∫C(3x2+ycosx)dx+(sinx−4y3)dy∫C(3x2+ycos⁡x)dx+(sin⁡x−4y3)dy, where CC is an arbitrary path from A(−π,−1)A(−π,−1) to B(2π,1)B(2π,1),...
    asked 1 hour ago
  • the ordinates of a 6-h unit hydrograph for a particular catchment are 0,10,30,50,40,30,20,10 and 0 m3/s...
    asked 1 hour ago
  • Please solve this using R code Part 3: A particular item is handmade in two stages...
    asked 1 hour ago
  • Compare the American Cousnelors Association (ACA) code of ethics regarding conflict of interest to the National...
    asked 1 hour ago
  • A fisherman's scale stretches 3.2 cm when a 2.1 kg fish hangs from it. a) What...
    asked 1 hour ago
  • Compare the American Counselors Association (ACA) code of ethics regarding referral due to dual relationship possibility...
    asked 2 hours ago