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Long Run Phillips Curve
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Long Run Phillips Curve
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21. Revisiting Inflation, Unemployment, and Policy / Long Run Phillips Curve / Problem 2
Problem 2
What are the implications of a vertical long run aggregate supply curve in the ADAS model?
A
It shows that aggregate demand has no impact on the economy.
B
It suggests that output is fixed at potential GDP, and price level changes do not affect output.
C
It indicates that both output and price level are flexible in the long run.
D
It implies that output can increase indefinitely without causing inflation.
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