Answer :
The long-run aggregate supply curve is vertical at the level of output (c) at which unemployment is at its natural rate.
- Because this is the amount that would be generated once prices are completely capable of adjusting, the LRAS curve is vertical at full employment as well. Some prices are persistent in the near term.
- This implies that producers may alter their output in response to changes in the price level.
- Businesses won't modify the amount of Real GDP output they create when the price level changes.
- Wages and resource prices are changeable over the long term. Wages will rise by the same amount as price levels do.
- At full employment, the long-run aggregate supply curve (LRAS) is vertical.
When unemployment is at the natural rate?
- Natural unemployment, also known as the natural rate of unemployment, is the level of unemployment that continues in an economy that is thought to be operating at "full employment."
- It implies that there is never zero unemployment in an economy and is a hypothetical rate of unemployment.
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