If the economy is operating at or near full capacity, the long- run AS curve will be steeper.

Question

Quizplus · Accepted Answer

When the economy is operating at or near full capacity, resources are almost fully utilized, making it difficult to increase output. This situation makes the long-run aggregate supply (AS) curve steeper, reflecting the limited ability to increase production in response to rising demand without causing inflation.

If the Economy Is Operating at or near Full Capacity