The Keynesian short-run aggregate supply curve
A) is horizontal.
B) is vertical.
C) is downward sloping.
D) is upward sloping.

Question

Quizplus · Accepted Answer

The Keynesian short-run aggregate supply curve is horizontal, indicating that prices do not change as demand increases or decreases in the short run. This reflects the idea that there can be excess capacity or unemployment in the economy, so output can increase without a rise in prices.

The Keynesian Short-Run Aggregate Supply Curve