The slope of the AD curve is important because it explains the
A)responsiveness of consumers to changes in the price level.
B)impact on Y and P for a given change in the SAS curve.
C)responsiveness of money demand to price changes.
D)responsiveness of business firms to price changes.

Question

Quizplus · Accepted Answer

The slope of the AD curve shows the degree of responsiveness of Y (output) and P (price level) to changes in the SAS curve (aggregate supply). A steeper AD curve indicates a lower output and a higher price level in response to a given decrease in SAS, while a flatter AD curve suggests a smaller increase in the price level and a greater increase in output in response to the same decrease in SAS.

The Slope of the AD Curve Is Important Because It