Ask a New Question
Menu

The Long-Run Aggregate Supply curve represents:

a. the amount our economy is actually producing.
b. why lower wages increase corporate profits.
c. how higher prices lead to more resources.
d. how much our economy could produce.

1 answer

The Long-Run Aggregate Supply (LRAS) curve represents:

d. how much our economy could produce.

The LRAS shows the total output an economy can produce when it is at full employment, regardless of the price level. It is vertical, indicating that in the long run, the economy's output is determined by factors such as technology, resources, and institutions rather than prices.