The flatter the aggregate supply curve, the less the amount of government spending necessary to close a $1 billion GDP gap.

Question

Quizplus · Accepted Answer

If the aggregate supply curve is flatter, it means the economy has more unused resources and can produce more output without a significant increase in prices. Therefore, the government can use less spending to close the GDP gap as the economy can respond to the increased demand without facing inflationary pressures.

The Flatter the Aggregate Supply Curve, the Less the Amount