Which of the following is an accurate statement about the aggregate supply curve?
A)Keynesians view it as vertical up until full employment,at which point it becomes horizontal.
B)Monetarists view it as horizontal.
C)The consensus view is that it begins as horizontal,then starts to slope upward to the right as the economy approaches full employment,and eventually becomes vertical beyond full employment.

Question

Quizplus · Accepted Answer

The consensus view is that the aggregate supply curve is horizontal in the short run, with prices and wages sticky, but then gradually slopes upward to the right as the economy approaches full employment and resources become scarce. Once the economy reaches full employment, the aggregate supply curve becomes vertical, as there are no more unused resources available to increase production regardless of price levels. This view is often referred to as the "neoclassical synthesis" or "new Keynesian" view. Monetarists, on the other hand, view the aggregate supply curve as mostly vertical in the long run, with only temporary periods of horizontal fluctuations caused by rigid prices and wages. Keynesians, meanwhile, view the curve as mostly horizontal up to full employment, with the possibility of longer-term upward slopes due to supply-side constraints.

Which of the Following Is an Accurate Statement About the Aggregate