Final answer:
The true statement is that the long-run aggregate supply (LRAS) curve can move over time, reflecting changes in production capabilities. Unlike the short-run aggregate supply (SRAS), which has a positive relationship with the price level, the LRAS is vertical and represents the output at potential GDP in the long run. Option B is correct answer.
Step-by-step explanation:
The true statement regarding aggregate supply in the short and long run is that the long-run aggregate supply (LRAS) curve can move over time. This reflects changes in the factors that impact production capabilities such as technology, demographics, and policy.
In contrast, the short run aggregate supply (SRAS) curve shows a positive relationship between the price level and the level of real GDP as firms respond to changes in demand with existing resources and capacities. The SRAS curve is upward-sloping because an increase in the price level of outputs with fixed input costs can lead to higher profits and, thus, an incentive to increase production.
It's also important to note that the long run aggregate supply curve is vertical at the level of potential GDP. This indicates that in the long run, the economy is limited to producing at its potential GDP regardless of the price level. Thus, in the long run, there are no direct relationships between the price level and real GDP, which is a contrast to the short run where such a relationship exists due to price and wage stickiness. Lastly, the SRAS can shift in response to wage changes or other input costs, but in the long run, it is the LRAS that determines the output at potential GDP, reflecting the economy's full employment level.