An increase in aggregate demand will have the greatest short-run effect on real output if the
A)aggregate demand curve is horizontal
B)aggregate demand curve is vertical
C)aggregate demand curve is horizontal and the short-run aggregate supply curve is vertical
D)short-run aggregate supply curve is vertical
E)short-run aggregate supply curve is horizontal

Question

Quizplus · Accepted Answer

When the short-run aggregate supply curve is horizontal, an increase in aggregate demand leads to a significant increase in real output without affecting the price level.

An Increase in Aggregate Demand Will Have the Greatest Short-Run