According to the classical model, prices are _____, making the aggregate supply curve _____ in the short run.
A) sticky; upward sloping
B) flexible; vertical
C) flexible; downward sloping
D) sticky; vertical

Question

Quizplus · Accepted Answer

According to the classical model, prices are flexible, meaning they can adjust quickly to changes in supply and demand. This flexibility leads to the aggregate supply curve being vertical in the short run, as output is not affected by price levels in this model.

According to the Classical Model, Prices Are _____, Making the Aggregate