The horizontal shape of the immediate short run aggregate supply implies that:
A)the total amount of output in the economy depends only on the general price level.
B)the total amount of output in the economy depends only on the volume of spending.
C)the total amount of output in the economy is fixed.
D)the total amount of spending depends on the price of inputs.

Question

Quizplus · Accepted Answer

In the immediate short run, prices are sticky, so output is determined by the level of spending rather than price changes.

The Horizontal Shape of the Immediate Short Run Aggregate Supply