A relatively steep aggregate demand curve indicates that
A) velocity is relatively constant.
B) the economy is near full employment.
C) inflation is relatively high.
D) spending is sensitive to changes in the price level.

Question

Quizplus · Accepted Answer

A relatively steep aggregate demand curve indicates that a small change in the price level leads to a large change in the level of aggregate expenditures. This implies that spending is sensitive to changes in the price level, which is reflected in the steepness of the curve.

A Relatively Steep Aggregate Demand Curve Indicates That