The greater the upward slope of the aggregate supply curve,the greater the increase in the price level when aggregate demand increases.

Question

Quizplus · Accepted Answer

This statement is true. When the upward slope of the aggregate supply curve is greater, a given increase in aggregate demand will result in a greater increase in the price level because suppliers are less able to increase output in response to increased demand. This is known as the "low output/higher price" scenario where an increase in demand results in a disproportionately large increase in price due to limited supply.

The Greater the Upward Slope of the Aggregate Supply Curve,the