If the price level kept decreasing,the short-run aggregate supply curve would get flatter because
A)all the unemployed would eventually be hired.
B)we could hire any and all resources at the going rate without increasing prices or the price of inputs..
C)the rate at which capacity can be expanded increases indefinitely.
D)the long-run aggregate supply curve is horizontal.

Question

Quizplus · Accepted Answer

If the price level kept decreasing, it would mean that the prices of inputs and resources would also be decreasing. In such a context, businesses would be able to hire any and all resources they need at the going rate without having to increase prices or production costs. Therefore, the short-run aggregate supply curve would become flatter as the economy has more available resources to produce goods and services at the same price level.

If the Price Level Kept Decreasing,the Short-Run Aggregate Supply Curve