If the economy's output response to changes in current inflation is small, the slope of the dynamic aggregate demand curve will be:
A) flat.
B) steep.
C) positive.
D) zero.

Question

Quizplus · Accepted Answer

A small output response to changes in current inflation implies that it takes a large change in inflation to significantly affect output. This characteristic is represented by a steep dynamic aggregate demand curve, indicating that output is relatively insensitive to changes in inflation.

If the Economy's Output Response to Changes in Current Inflation