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Running Head: QUESTIONS.
1. Explain why the aggregate supply curve is vertical in the long run. Why might the long-run
aggregate-supply curve shift?
The aggregate-supply curve is vertical in the long run. This is because the total production of
services and goods in the economy is its actual gross domestic product (GDP). In the long run,
the gross domestic product is dependent on labour supply, land, capital, availability of natural
resources, and the availability of relevant technology to convert these resources to services and
goods that can be utilized. In the long run, the above factors of production determine the number
of services and goods supplied in an economy. This implies that the quantity supplied will be the
same regardless of the level of the p...
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