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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Explain why the long-run aggregate-supply curve is vertical.

To determine

Why the long run aggregate supply curve is vertical.

Explanation

The supply depends upon the price level in the economy. When the price level is higher, the suppliers will be receiving higher income and this would incentivize them to increase the supply in the economy and vice versa. The aggregation of the supply curves of all the firms in the economy is known as the aggregate supply curve. In the short run period, the aggregate supply curve represents the relationship between the price level in the economy and the supply by the firms. In the long run period, the aggregate supply curve represents the relationship between the price level in the economy and the quantity of real GDP supplied by the firms in the economy.

In the short run period, the aggregate supply curve represents the relationship between the price level in the economy and the supply by the firms...

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