What is the slope of the aggregate supply curve,according to neoclassical economists?
A)Vertical,because prices tend to be inflexible.
B)Vertical at the capacity level of output in the economy.
C)Horizontal,because wages are flexible.
D)Horizontal,because prices are flexible.

Question

Quizplus · Accepted Answer

According to neoclassical economists, the aggregate supply curve is vertical at the capacity level of output in the economy. This is because at full capacity, all resources are being used and any increase in demand can only lead to a rise in prices, not an increase in output. However, the slope of the curve may become upward sloping as production exceeds capacity due to diminishing returns to inputs.

What Is the Slope of the Aggregate Supply Curve,according to Neoclassical