The Keynesian short-run aggregate supply curve in the simplified Keynesian model is unrealistic because
A) a vertical curve does not make economic sense.
B) prices and wages will never decrease.
C) the classical model is better in explaining how the economy operates.
D) some price adjustments do take place in the short run.

Question

Quizplus · Accepted Answer

The Keynesian short-run aggregate supply curve is considered unrealistic by some because it suggests that prices do not adjust in the short run. However, in reality, some price adjustments do occur even in the short run, making the assumption of completely rigid prices less accurate.

The Keynesian Short-Run Aggregate Supply Curve in the Simplified Keynesian