AP Macroeconomics Flashcards: Long-Run Aggregate Supply (LRAS)
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Review key ideas with interactive flashcards. This set includes 10 cards to help you master important concepts.
What is the consequence of flexible long-run prices and wages on the relationship between inflation and unemployment?
The consequence of fully flexible prices and wages is the lack of a long-run trade-off between inflation and unemployment.
Card 1 of 10
All Flashcards (10)
What is the consequence of flexible long-run prices and wages on the relationship between inflation and unemployment?
The consequence of fully flexible prices and wages is the lack of a long-run trade-off between inflation and unemployment.
If an economy is producing at a point on its LRAS curve, what does this imply about its use of resources?
This implies that all of the economy's resources are fully employed in the most efficient way possible.
What does the Long-Run Aggregate Supply (LRAS) curve represent?
The LRAS curve represents the maximum sustainable capacity an economy can produce when all resources are fully employed.
What is the key assumption about input prices in the short run compared to the long run?
In the short run, some input prices are assumed to be fixed or 'sticky', while in the long run, all input prices are assumed to be fully flexible.
Why is the LRAS curve vertical?
The LRAS curve is vertical because in the long run, wages and prices fully adjust, making the full-employment output level independent of the price level.
Define 'maximum sustainable capacity'.
Maximum sustainable capacity is the total output an economic system will produce over a set period of time if all resources are fully employed.
Based on the provided text, why is a policy that increases inflation unable to permanently reduce unemployment?
Such a policy is ineffective in the long run because as wages and prices fully adjust, the economy returns to its full-employment output, eliminating any trade-off between inflation and unemployment.
At what specific level of output is the LRAS curve located?
The LRAS curve is vertical at the full-employment level of output.
How does the LRAS curve relate to the Production Possibilities Curve (PPC)?
The LRAS curve corresponds to the PPC because they both represent the maximum sustainable capacity or output of an economy with full employment of its resources.
What is the key difference between the short run and the long run regarding prices and wages?
In the short run, some input prices are fixed, while in the long run, all prices and wages are fully flexible.