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Asked by Sarah Gascon on Jun 01, 2024

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Because the price level does not affect the long-run determinants of real GDP, the long-run aggregate-supply is vertical.

Long-Run Aggregate-Supply

The total output of an economy when all resources are fully employed, with prices of inputs and outputs able to adjust to any changes.

Real GDP

The inflation-adjusted value of all goods and services produced within a country's borders in a year, reflecting the actual productivity of an economy.

Price Level

An index reflecting the overall current prices for a wide range of goods and services within the economy, averaged out.

  • Understand the transient and persistent consequences of monetary policy on economic performance.
  • Distinguish between actual and nominal variables and understand their importance.
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Zybrea KnightJun 07, 2024
Final Answer :
True
Explanation :
In the long run, the aggregate supply is considered vertical because real GDP is determined by factors such as capital, labor, and technology, rather than by the price level. This implies that changes in the price level do not affect the long-run output of the economy.

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