If the aggregate supply curve is steep,

Question

Quizplus · Accepted Answer

If the aggregate supply curve is steep, it suggests that an increase in aggregate demand will only result in a small increase in output as it is difficult to quickly ramp up production. Hence, business firms are probably producing near capacity, and any increase in demand will not lead to a significant increase in output. Therefore, option C is the correct answer. Options A and B are incorrect as a steep aggregate supply curve suggests that increased aggregate demand may lead to higher prices or wages, but only to a limited extent due to limited output.

If the Aggregate Supply Curve Is Steep