Traditional Keynesians argued that when wages are rigid, changes in output result in:
A)small changes in goods market prices and a flat aggregate supply curve.
B)large changes in goods market prices and a flat aggregate supply curve.
C)large changes in goods market prices and a steep aggregate supply curve.
D)small changes in goods market prices and a steep aggregate supply curve.
E)small changes in goods market prices and a horizontal aggregate demand curve.

Question

Quizplus · Accepted Answer

Traditional Keynesians believe that with rigid wages, output changes lead to small price changes, resulting in a flat aggregate supply curve.

Traditional Keynesians Argued That When Wages Are Rigid, Changes in Output