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

The immediate-short-run aggregate supply curve is typically horizontal, indicating that total output will adjust to meet the volume of spending in the economy. This reflects a situation where prices do not immediately respond to changes in demand, allowing output to change instead.

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