The short-run aggregate supply curve in modern Keynesian analysis represents the relationship between
A) the real output of goods and services in the economy and the price level.
B) the real output of goods and services in the economy and the price level when people have fully adjusted their behavior.
C) the real output of goods and services in the economy and the price level when people have not fully adjusted their behavior.
D) the nominal output of goods and services and the real output of goods and services.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve in modern Keynesian analysis represents the relationship between the real output of goods and services in the economy and the price level when people have not fully adjusted their behavior. This means that there may be some market imperfections or frictions that prevent wages and prices from adjusting immediately to changes in demand or supply. As a result, changes in demand or supply can temporarily affect both output and prices in the short run.

The Short-Run Aggregate Supply Curve in Modern Keynesian Analysis Represents