The slope of the aggregate supply curve becomes steeper, the faster the costs of production adjust to prices and the smaller the amount of excess capacity in the economy.

Question

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A steeper slope means that changes in price result in a larger change in quantity supplied. This occurs when production costs adjust quickly to changes in prices and there is less excess capacity in the economy (i.e. firms are operating closer to their full potential).

The Slope of the Aggregate Supply Curve Becomes Steeper, the Faster