Many economists maintain that

Question

Quizplus · Accepted Answer

A) At low levels of real GDP, the aggregate supply curve is nearly horizontal because firms have excess capacity and can easily increase output without increasing prices.
B) At very high levels of real GDP, the aggregate supply curve is nearly vertical because firms are operating at full capacity and are unable to increase output without experiencing rising costs and prices.
C) Any change in aggregate demand will have a greater effect on output when the economy is in a recession and has excess capacity, but on prices when the economy is near full employment as firms face constraints in increasing output.

Many Economists Maintain That