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SLOPE, LONG-RUN AGGREGATE SUPPLY CURVE: The long-run aggregate supply (LRAS) curve is a vertical line with an infinite slope, reflecting the independent relation between the price level and aggregate real production. A higher price level is associated with the same real production as a lower price level. And this real production is that produced when resources are fully employed, that is, full-employment production. Real production is unaffected by the price level because prices are flexible in the long run. Long-run price flexibility ensures that ALL markets (product, financial, and resource) are in equilibrium.
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INCENTIVE A cost or benefit that motivates a resource allocation decision or other action by consumers, businesses, or other participants in the economy. Incentives can be monetary or nonmonetary. A few of the more important incentives affecting economic decisions are prices, taxes, and government regulations.
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Lewis Carroll, the author of Alice in Wonderland, was the pseudonym of Charles Dodgson, an accomplished mathematician and economist.
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"Cherish your visions and your dreams as they are the children of your soul; the blue prints of your ultimate achievements." -- Napoleon Hill, Author
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