Question

Aggregate supply function becomes parallel to the Y-axis, after the full employment level has been achieved in the economy.

• A. True
• B. False

Answer 1

The correct option is A True

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. Aggregate supply function is a upward sloping curve which denotes the direct relation between the level of output produced in the economy and income generates. The curve become vertical i.e. parallel to Y-axis after full employment level of output indicating the maximum amount of output which can be produced in the economy generating the respective national income.