If in the short run prices did not respond at all to changes in aggregate demand, the short-run aggregate supply curve would
A)be vertical.
B)be horizontal.
C)slope up.
D)slope down.

Question

Quizplus · Accepted Answer

If in the short run prices did not respond at all to changes in aggregate demand, the short-run aggregate supply curve would be horizontal, which means that an increase in aggregate demand would cause output to increase without affecting prices. This indicates a situation of excess capacity or unemployment in the economy, where firms can increase production without incurring any additional costs.

If in the Short Run Prices Did Not Respond at All