If an economy is going through a severe recession (or depression), then the short-run aggregate supply curve will likely be:
A) upward sloping.
B) downward sloping.
C) vertical.
D) horizontal.

Question

Quizplus · Accepted Answer

During a severe recession or depression, the short-run aggregate supply curve is typically horizontal or very flat. This reflects that there are many idle resources (e.g., unemployed workers, unused factories), so increases in demand can lead to increases in output without putting upward pressure on prices.

If an Economy Is Going Through a Severe Recession (Or