Is the actual amount of output that corresponds to the long-run aggregate supply curve fixed? Explain.
What will be an ideal response?
No. The long-run supply curve is vertical at the economy's potential level of output, which indicates that there isn't a long-run relationship between the rate of inflation and output. The potential level of output, though, is dependent on many factors, including the amount and quality of resources (inputs), the rate of improvements in technology, the rate of innovation and invention, the amount of investment, the rate of depreciation, the level of education etc. As a result, the level of potential output in many countries is usually increasing. So while we draw the long-run aggregate supply curve as vertical at the potential level of output, the curve is usually shifting to the right over time.
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When the price level rises, the long-run aggregate supply curve...
What will be an ideal response?
Per-unit transaction costs
a. may cause the demand and supply curves to shift either inward or outward depending on the value obtained from transaction agents. b. refer only to the commission paid to a third party for each transaction made. c. are absorbed by the party seeking the transaction. d. have the same effect on behavior as do lump-sum transaction costs; the difference in terminology is purely definitional.