Aggregate demand shocks have a large effect on real GDP and a small effect on the price level
A)the steeper the AS curve.
B)on the downward-sloping portion of the AS curve.
C)the flatter the AS curve.
D)when the AS curve is vertical.
E)if the AD curve is steep.

Question

Quizplus · Accepted Answer

When the aggregate supply (AS) curve is flatter, changes in aggregate demand (AD) have a larger impact on real GDP and a smaller impact on the price level, as the economy can increase output without significant increases in prices.

Aggregate Demand Shocks Have a Large Effect on Real GDP