Economists who view the AS curve as vertical believe that government ________________ to raise Real GDP (in the short run)from the demand side of the economy.Economists who view the AS curve as upward-sloping believe that changes in Real GDP (in the short run)_________ result from changes on the demand side.

Question

Quizplus · Accepted Answer

If the AS curve is vertical, it means that the economy has reached its full capacity and any attempts by the government to raise Real GDP from the demand side will only result in higher prices, but not higher output. On the other hand, if the AS curve is upward-sloping, it means that changes in Real GDP can occur as a result of changes in demand, but it may not always be successful, as there could be other factors affecting the economy, such as supply-side shocks or changes in expectations. Therefore, economists who believe in an upward-sloping AS curve believe that the government may be able to affect Real GDP in the short run, but cannot guarantee it.

Economists Who View the AS Curve as Vertical Believe That