Which statement accurately describes the long-run aggregate supply (LRAS) curve?

Show Answers

It is vertical since proportional changes in all prices and wages do not alter output levels.It slopes upward because price expectations and wages remain constant in the long run.It shifts to the right when the government increases the minimum wage.It moves leftward when the natural unemployment rate decreases.It becomes horizontal due to fixed input prices.

Explanation

The LRAS curve is vertical because when all prices and wages change proportionally, the overall output remains unchanged. This reflects the economy's maximum sustainable output regardless of the price level. Other options are incorrect because the LRAS does not slope upward in the long run, changes in minimum wage typically affect short-run aggregate supply, and a decline in the natural unemployment rate generally shifts LRAS to the right, not left.