When the economy is in a depression, the economy is operating on that portion of the aggregate supply curve that is
A) downward sloping
B) upward sloping
C) vertical
D) horizontal

Question

Quizplus · Accepted Answer

When the economy is in a depression, it is operating on the horizontal portion of the aggregate supply curve. This indicates that there are idle resources and the economy can increase output without increasing the price level, reflecting a situation of significant underutilization of resources.

When the Economy Is in a Depression, the Economy Is