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.
Verified Answer
Learning Objectives
- 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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