When the aggregate demand curve shifts, the steeper the SAS curve the ________ will be a change in the price level and the ________ will be the multiplier.
A) larger; larger
B) larger; smaller
C) smaller; larger
D) smaller; smaller

Question

Quizplus · Accepted Answer

When the aggregate demand curve shifts, the steeper the Short-Run Aggregate Supply (SAS) curve, the larger the change in the price level and the smaller the multiplier effect. This is because a steeper SAS curve indicates less responsiveness of quantity to price changes, leading to more pronounced price level changes and a dampened multiplier effect.

When the Aggregate Demand Curve Shifts, the Steeper the SAS