When the Aggregate Supply and Aggregate Demand Model Is Drawn

question 54

Multiple Choice

When the aggregate supply and aggregate demand model is drawn to represent the Keynesian perspective, the short-run aggregate supply curve is:

• A) horizontal until it reaches the natural rate of output and then becomes vertical.
• B) vertical until it reaches the natural rate of output and then becomes horizontal.
• C) upward sloping when there is unemployment and downward sloping when at full employment.
• D) downward sloping when there is unemployment and upward sloping when at full employment.

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