Question

The long-run aggregate supply is: the economy's current potential output O is at the point where the unemployment rate is zero shifts to the right when the price level falls O all of the above

Answer 1

The long run aggregate Supply is -------

the economy's current potential level.

# Long run aggregate supply (LRAS) refers to the output that an economy can produce by efficiently utilising all factors of production.It is the full emploment output or natural level of output which is measured in terms of real GDP,considering price level.That's why it is called current potential output level.

#LRAS lies at the point where there is full employment level and full employment level doesn't mean zero unemployment .The reason is full employment means when there is no cyclical unemployment but zero unemployment means there is frictional or structural unemployment in the economy.

# LRAS csn' t shift to the right when price level falls because it is the efficient level of income output and employment which can be increased or shifted rightward when resources are increased otherwise LRAS is a verical line.