Final answer:
The long-run aggregate supply (LRAS) curve is vertical in the aggregate demand and aggregate supply diagram. It represents the level of potential GDP in an economy when all resources are fully utilized.
Step-by-step explanation:
The long-run aggregate supply (LRAS) curve is vertical (b) in the aggregate demand and aggregate supply diagram. The LRAS curve represents the level of potential GDP in an economy when all resources are fully utilized. Unlike the short-run aggregate supply curve (SRAS), the LRAS curve is not affected by changes in prices or demand.
For example, if there is an increase in aggregate demand, the short-run equilibrium point will shift to a higher price level and higher output level along the SRAS curve. However, in the long run, the economy will adjust back to its potential GDP level, represented by the vertical LRAS curve.