Aggregate demand (AD)shocks have a smaller effect on real GDP and a larger effect on the price level,
A)on the upward- sloping portion of the AS curve.
B)on the downward- sloping portion of the AS curve.
C)the steeper the AS curve.
D)if the AD curve is flatter.
E)the flatter the AS curve.

Question

Quizplus · Accepted Answer

When the AS curve is steeper, it indicates that output is less responsive to changes in aggregate demand, leading to a larger effect on the price level and a smaller effect on real GDP.

Aggregate Demand (AD)shocks Have a Smaller Effect on Real GDP