In the classical model,the supply-determined nature of output is illustrated by a(n)
A)horizontal aggregate supply curve.
B)vertical aggregate supply curve.
C)upward sloping aggregate supply curve.
D)downward sloping aggregate supply curve.

Question

Quizplus · Accepted Answer

The classical model assumes that the economy is always at full employment, so any increase in demand will only lead to an increase in prices rather than an increase in output. This means that the aggregate supply curve is vertical, indicating that output is supply-determined rather than demand-determined.

In the Classical Model,the Supply-Determined Nature of Output Is Illustrated