From one period to the next,the change in real GDP depends on the shift in aggregate demand
A)but not on how SAS might shift.
B)and on SAS,but only if it also shifts.
C)and on SAS,but only if it is horizontal.
D)and on the slope and shifting of SAS.

Question

Quizplus · Accepted Answer

The change in real GDP from one period to the next depends on the slope and shifting of the SAS curve as well as the shift in aggregate demand. The SAS curve represents the potential output of the economy, and if there are changes in the cost of production or productivity, the SAS curve will shift. The slope of the SAS curve determines how much of an effect changes in aggregate demand will have on real GDP. Therefore, both factors are important in determining the change in real GDP from one period to the next.

From One Period to the Next,the Change in Real GDP