Question

The full employment level of real GDP is $6 billion for the recently formed island nation of Turtleopolis. Use the line segment to show long‑run aggregate supply on the graph.

Answer 1

*see image*

Step-by-step explanation:

The long‑run aggregate supply curve is vertical at the point of full employment GDP. In this case, it is $6 billion. A change in the price level will not affect the production capabilities of an economy in the long run. LRAS is at the same point of real GDP for every price level. The LRAS curve will shift when the economy experiences growth, but, even then, it will maintain its vertical shape.