Economist Brown believes that changes in aggregate demand affect only the price level,and economist Black believes that changes in aggregate demand affect only Real GDP.What does the aggregate supply (AS)curve look like for each economist?
A) For economist Brown the AS curve is vertical and for economist Black the AS curve is horizontal.
B) For economist Brown the AS curve is horizontal and for economist Black the AS curve is vertical.
C) For economist Brown the AS curve is upward sloping and for economist Black the AS curve is downward sloping.
D) For economist Brown the AS curve is downward sloping and for economist Black the AS curve is upward sloping.

Question

Quizplus · Accepted Answer

For economist Brown, who believes changes in aggregate demand affect only the price level, the AS curve is vertical, indicating that output (Real GDP) does not change as the price level changes. For economist Black, who believes changes in aggregate demand affect only Real GDP, the AS curve is horizontal, indicating that the price level does not change as Real GDP changes.

Economist Brown Believes That Changes in Aggregate Demand Affect Only