LRAS curve is vertical because:

LRAS curve is vertical because:

• A. A vertical curve representing output determined by potential output.
• B. A horizontal line showing constant output at all price levels.
• C. A vertical relation where aggregate output in the long run is determined by the economy's potential output and prices are flexible.
• D. A downward-sloping curve indicating inverse relationship.

Answer: (C)

In the long run, the economy’s output is determined by its productive capacity—potential output from factors like labor, capital, and technology. Because prices are flexible in the long run, changes in aggregate demand don’t change real GDP; they just move the price level. So the long-run aggregate supply is a vertical line: output is fixed at potential while prices adjust. That’s why the best description is that the LRAS is vertical because aggregate output in the long run is determined by the economy’s potential output and prices are flexible. The other statements miss either the price flexibility or misstate the relationship between price levels and real output: one emphasizes potential output without recognizing price adjustment, another depicts output as constant across all price levels, and another shows a downward-sloping relation which isn’t how LRAS behaves.

In the long run, the economy’s output is determined by its productive capacity—potential output from factors like labor, capital, and technology. Because prices are flexible in the long run, changes in aggregate demand don’t change real GDP; they just move the price level. So the long-run aggregate supply is a vertical line: output is fixed at potential while prices adjust.

That’s why the best description is that the LRAS is vertical because aggregate output in the long run is determined by the economy’s potential output and prices are flexible. The other statements miss either the price flexibility or misstate the relationship between price levels and real output: one emphasizes potential output without recognizing price adjustment, another depicts output as constant across all price levels, and another shows a downward-sloping relation which isn’t how LRAS behaves.