3. In the long run, the aggregate price level has A. No effect on the quantity of aggregate output. B. A positive effect on the quantity of aggregate output. C. A negative effect on the quantity of aggregate output. D. A positive impact on aggregate output, but no impact on employment. E. A positive impact on employment, but no impact on aggregate output

A. No effect on the quantity of aggregate output.

Explanation:

In Economics, there are primarily two (2) factors which affect the availability and the price at which goods and services are sold or provided, these are demand and supply.

The law of demand states that, the higher the demand for goods and services, the higher the price it would be sold all things being equal. On the other hand, law of supply states that the higher the price of goods and services, the lower the supply.

In order to understand both short-run economic fluctuations and how the economy move from short to long run, we need the aggregate supply and aggregate demand model.

Aggregate demand (AD) can be defined as the total quantity of output (final goods and services) that is demanded by consumers at all possible price levels in an economy at a particular time.

Aggregate supply (AS) refers to the total quantity of output (goods and services) that firms are willing to produce and sell at a given price in an economy at a particular period of time.

On a standard Aggregate demand (AD)-Aggregate supply (AS) curve, the y axis denotes the Price (P) of goods and services while the x axis typically denotes the Output (Q) of final goods and services.

An aggregate supply curve gives the relationship between the aggregate price level for goods or services and the quantity of aggregate output supplied in an economy at a specific period of time.

In the long run, the aggregate price level has no effect on the quantity of aggregate output that is being supplied and as such the long-run aggregate supply (LRAS) curve is vertical.

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