Which of the following is true about the Keynesian aggregate supply (AS)curve?
A)The short-run AS is flat,but the long-run AS is vertical.
B)The short-run AS is upward sloping but the long-run AS is flat.
C)The short-run AS is upward sloping but the long-run AS is vertical.
D)The short-run and the long-run AS are upward sloping.

Question

Quizplus · Accepted Answer

According to Keynesian economics, the short-run AS curve is upward sloping, indicating that higher prices lead to an increase in output and employment due to the sticky wages and prices. However, in the long run, the economy returns to its natural level of output and employment, and the AS curve becomes vertical, indicating that only changes in aggregate demand affect the price level, and not output or employment. Therefore, option C is the correct statement.

Which of the Following Is True About the Keynesian Aggregate