Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 33 - Part XII - Aggregate Demand and Aggregate Supply - Questions for Review: 4

Answer

The long run aggregate supply is vertical due to the fact that in the long run an economy's supply of goods and services depends on its labor, resources, capital, raw materials and technology and equipment used to turn these inputs into goods and services. Price level has no impact on these long run objects of real GDP.

Work Step by Step

Understand that in the long run the supply components mentioned above are not short run such as technology. Price will not alter this objectives in the long run.
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