A relatively steep aggregate demand curve indicates that
A) velocity is relatively constant.
B) the economy is near full employment.
C) inflation is relatively high.
D) spending is insensitive to changes in the price level.

Question

Quizplus · Accepted Answer

A steep aggregate demand curve indicates that changes in price level have a relatively small effect on aggregate expenditures, suggesting that spending is relatively insensitive to price changes. This could be due to factors such as sticky prices or a lack of available substitutes for goods and services. It does not necessarily indicate anything about velocity, employment, or inflation.

A Relatively Steep Aggregate Demand Curve Indicates That