The flatter the SP curve
A)the greater will be the shift in the SP.
B)the greater will be the change in inflation and the smaller will be the change in real GDP for any given change in nominal GDP growth.
C)the greater will be the change in real GDP and the smaller will be the change in inflation for any given change in nominal GDP growth.
D)the greater will be the growth of nominal GDP.

Question

Quizplus · Accepted Answer

The flatter the Short-Run Aggregate Supply (SRAS) curve, which is often referred to as the SP curve in some contexts, the more responsive real GDP is to changes in the price level. This means that for any given change in nominal GDP growth, a flatter curve implies a larger change in real GDP and a smaller change in the price level (inflation).

The Flatter the SP Curve