Consider an economy with a relatively steep AS curve. If there is a shift to the right in the AD curve, there will be a _ in the price level and _ in national output.
A)large increase; a small decrease
B)small increase; a large increase
C)large increase; a small increase
D)large increase; no change
E)small increase; a large decrease

Question

Quizplus · Accepted Answer

A steep AS curve indicates that the economy is near full capacity, so a rightward shift in AD will lead to a large increase in the price level and only a small increase in national output.

Consider an Economy with a Relatively Steep AS Curve