Answer to Question #62858 in Macroeconomics for Gian

Question

Aggregate supply curve ... (several answers possible)
(a) is vertical in the long run because, in the long term, expected prices are equal to the actual ones.
(b) is moved to the right if the potential output rises.
(c) shows a positive relationship between the price level and output in the short run.
(d) is not affected by the expectations formation processes.

Answer 1

Aggregate supply curve ...
(b) is moved to the right if the potential output rises.
(c) shows a positive relationship between the price level and output in the short run.