What is true about the long-run
Explanation of Solution
The long-run
The aggregate supply curve can neither be horizontal nor upward or downward-sloping as it is vertical.
Thus, option ‘b’ is the correct option.
At the production potential, the long-term aggregate supply curve is a vertical line. Hence, option (a) is incorrect.
Because of the sticky pricing, policymakers can take advantage of how changes in the money supply affect investment, employment, output, and consumption in the real economy. Hence, option (c) is incorrect.
The long-term aggregate supply curve is a vertical line. Hence, option (d) is incorrect.
The potential
Chapter 4R Solutions
Krugman's Economics For The Ap® Course
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