What characterizes the long-run aggregate supply curve?

The long-run aggregate supply (LRAS) curve is characterized by a vertical line showing potential GDP. This vertical orientation indicates that, in the long run, the total output of an economy is determined by factors such as technology, resources, and institutional structures rather than the price level. In other words, regardless of the price level, the economy’s potential output remains constant because it reflects the maximum sustainable level of production when all resources are utilized efficiently.

Understanding this concept is crucial because the long run is a period where all inputs are variable, allowing the economy to adjust to changes and reach its full potential output. The positioning of the LRAS at potential GDP signifies the economy's full employment level, meaning that it operates at a point where resources are optimally deployed. This contrasts with other aggregate supply curves that may slope in different directions due to changes in price level or outputs in the short run.