The exact change in equilibrium output due to a shift in the short-run aggregate demand curve depends on _____
A) the amount of tax imposed.
B) the steepness of the aggregate supply curve.
C) the steepness of the aggregate demand curve.
D) the gap between the supply curve and the demand curve.
E) the consumption pattern in the economy.

Question

Quizplus · Accepted Answer

The steepness of the aggregate supply curve determines how much a shift in the short-run aggregate demand curve will change the equilibrium output. A steeper aggregate supply curve implies a smaller change in output for a given shift in demand, while a flatter curve implies a larger change in output.

The Exact Change in Equilibrium Output Due to a Shift