Suppose a shift in the aggregate demand curve causes prices to increase a lot and real output to increase by a little.What does this suggest about the shape of short-run aggregate supply curve?
A) It is horizontal.
B) It is very steep.
C) It is vertical.
D) It is downward sloping.

Question

Suppose a shift in the aggregate demand curve causes prices to increase a lot and real output to increase by a little.What does this suggest about the shape of short-run aggregate supply curve?  
A) It is horizontal. 
B) It is very steep. 
C) It is vertical. 
D) It is downward sloping.

Quizplus · Accepted Answer

A very steep short-run aggregate supply curve suggests that increases in aggregate demand lead to large increases in price and only small increases in real output, which aligns with the scenario described.

Suppose a Shift in the Aggregate Demand Curve Causes Prices