Question

74. Which of the following statements is true? Group of answer choices a. The short-run aggregate...

74. Which of the following statements is true?

Group of answer choices

a. The short-run aggregate supply curve is downsloping.

b. The short-run aggregate supply curve is vertical.

c. The long-run aggregate supply curve is vertical.

d. The long-run aggregate supply curve is upsloping.

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Answer #1

By ‘short-run’ is meant a period of time in which the size of the plant and machinery is fixed, and the increased demand for the commodity is met only by an intensive use of the given plant, i.e., by increasing the amount of the variable factors.In the short-run, the aggregate supply is graphed as an upward sloping curve.The long-run aggregate supply curve is vertical which reflects economists’ beliefs that changes in the aggregate demand only temporarily change the economy’s total output. In the long-run, only capital, labor, and technology affect aggregate supply because everything in the economy is assumed to be used optimally. The long-run aggregate supply curve is static because it is the slowest aggregate supply curve.

Hence ( C ) part is a correct answer

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