The flatter the aggregate supply curve, the more the amount of government spending required to close a $1 billion GDP gap decreases.

Question

Quizplus · Accepted Answer

A flatter aggregate supply curve means that there is more spare capacity in the economy, so it is easier for the government to increase aggregate demand to close a GDP gap. Therefore, the amount of government spending required would decrease.

The Flatter the Aggregate Supply Curve, the More the Amount