PRC-3 · Chapter 13 · Question 47 of 50
A country's Long-Run Aggregate Supply (LRAS) curve is famously depicted as perfectly vertical. What does this vertical shape signify?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) That the economy is operating at the full utilization of existing resources (full employment)
Explanation
The vertical LRAS curve indicates the maximum physical productive potential of an economy where all resources are fully employed; output cannot increase regardless of price levels.
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