The shape of the immediate-short-run aggregate supply curve implies that
A)total output depends on the volume of spending.
B)increases in aggregate demand are inflationary.
C)output prices are flexible, but input prices are not.
D)government cannot bring an economy out of a recession by increasing spending.

Question

Quizplus · Accepted Answer

In the immediate-short-run, prices are sticky, meaning that total output is determined by the level of spending, as prices do not adjust quickly to changes in demand.

The Shape of the Immediate-Short-Run Aggregate Supply Curve Implies That