Beth is a new teaching assistant who frequently gets confused when explaining macroeconomics concepts. How should Beth complete the following statement to make it true? "In the AD-AS framework, the simple Keynesian model includes an aggregate supply curve that once the economy is producing at its Natural Real GDP."

is Vertical

Explanation:

In the AD-AS framework, the simple Keynesian model includes an aggregate supply curve that is vertical once the economy is producing at its Natural Real GDP."

The GDP is the total value of the final goods and services produced in a country in a certain period.

When the country is at its Natural Real GDP which is also its long term GDP, the Aggregate Supply curve will be vertical. This is because in the long-run, it is assumed that all the inputs are being utilized at their optimal levels and so a change in Aggregate demand will not affect the AS curve.

The AS curve can however be affected by changes in capital, labor, and/ or technology.

answer; at prices that violate government price regulations;

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