Question

Aggregate supply curve becomes a ____________, after the full employment level has been achieved in the economy.

• A. vertical line
• B. downward sloping curve
• C. horizontal line
• D. none of the above

Answer 1

The correct option is A vertical line

Aggregate supply refers to the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income. The aggregate supply function is an upward sloping curve that denotes the direct relationship between the level of output produced in the economy and income generates. The curve becomes vertical after full employment level of output indicating the maximum amount of output that can be produced in the economy generating the respective national income.

Hence, option A is correct.