With output and input prices fixed, the immediate short run aggregate supply curve is:
A)vertical.
B)upward sloping.
C)horizontal.
D)downward sloping.

Question

Quizplus · Accepted Answer

In the immediate short run, firms would not be able to adjust their production levels in response to changes in output prices. Therefore, the immediate short run aggregate supply curve is horizontal, indicating that output can be increased without any increase in input prices.

With Output and Input Prices Fixed, the Immediate Short Run