The Keynesian aggregate supply schedule slopes upward because of
A)unstable expectations.
B)inflexible wages and prices.
C)changes in technology.
D)differences between actual and expected price levels.

Question

Quizplus · Accepted Answer

The Keynesian aggregate supply schedule slopes upward because of inflexible wages and prices. Keynesians believe that wages and prices are sticky in the short run, meaning they do not adjust quickly to changes in demand or supply. As a result, firms may increase output in response to an increase in demand, but not increase prices immediately due to the stickiness of wages and prices. This results in the upward sloping Keynesian aggregate supply curve.

The Keynesian Aggregate Supply Schedule Slopes Upward Because of