f you believe that Keynes is right and prices are sticky in the short-run, then You would draw your Short-Run Aggregate Supply curve with a steep negative slope You would draw your Short-Run Aggregate Supply curve as a horizontal line You would draw your Short-Run Aggregate Supply curve with a steep positive slope You would draw your Keynesian Cross graph so that your planned expenditures line has a slope equal to the Marginal Propensity to Consume Two of the answers are correct
f you believe that Keynes is right and prices are sticky in the short-run, then
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You would draw your Short-Run
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You would draw your Short-Run Aggregate Supply curve as a horizontal line
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You would draw your Short-Run Aggregate Supply curve with a steep positive slope
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You would draw your Keynesian Cross graph so that your planned expenditures line has a slope equal to the Marginal Propensity to Consume
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Two of the answers are correct |
The short-run aggregate supply curve (SRAS) lets us capture how all of the firms in an economy answer price stickiness. When prices are sticky, the SRAS curve will slope upward. The SRAS curve shows that a better indicant ends up in more output.
There are two important things to notice about SRAS. For one, it represents a short-run relationship between indicant and output supplied. Aggregate supply slopes up within the short-run because a minimum of one price is inflexible. Second, SRAS also tells us there's a short-run tradeoff between inflation and unemployment. Because higher inflation results in more output, higher inflation is additionally related to lower unemployment within the short run.
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