What is the shape of the AS curve according to Keynesians?
A)Vertical,because prices tend to be inflexible.
B)Vertical,at the level of LAS.
C)Horizontal,because wages are inflexible.
D)Downward-sloping,because wages are inflexible.

Question

Quizplus · Accepted Answer

Keynesians argue that in the short run, wages (and prices) are inflexible, leading to a horizontal Aggregate Supply (AS) curve at levels of output below full employment. This reflects the idea that firms will meet demand at existing prices due to the inflexibility of wages.

What Is the Shape of the AS Curve According to Keynesians