Principles of Macroeconomics / Unit 10 MAC 0904 short lesson, about 20 seconds
The Vertical Long-Run Supply Curve
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The idea
Long-run aggregate supply is vertical at potential GDP. Aggregate demand cannot change long-run output; only potential GDP can. The curve drifts right over time, and that drift is growth.
In practice
Physical capital per person, human capital and technology move it; spending does not.
Where people slip
Vertical does not mean fixed. It means unresponsive to the price level.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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