The short-run aggregate supply curve in modern Keynesian analysis is
A) horizontal.
B) vertical.
C) upward sloping.
D) downward sloping.

Question

Quizplus · Accepted Answer

In modern Keynesian analysis, the short-run aggregate supply curve is upward-sloping, indicating that as the price level increases, businesses are willing to supply more output in the short-run due to expectations of increased aggregate demand. However, in the long-run, the aggregate supply curve becomes vertical, as factors such as wages and production costs adjust to the price level.

The Short-Run Aggregate Supply Curve in Modern Keynesian Analysis Is