A horizontal line showing the current rate of inflation, as determined by past expectations and pricing decisions is called the:
A)aggregate demand curve.
B)long-run aggregate supply line.
C)short-run equilibrium output line.
D)short-run aggregate supply line.

Question

Quizplus · Accepted Answer

The short-run aggregate supply (SRAS)line is a horizontal line that shows the current rate of inflation in the economy, as determined by past expectations of inflation and past pricing decisions. The short-run aggregate supply line is horizontal because, in the short run, producers supply whatever output is demanded at preset prices.

A Horizontal Line Showing the Current Rate of Inflation, as Determined