short-run aggregate supply curve
Not what you're looking for?
2. (The Multiplier and the Time Horizon) Explain how the steepness of the short-run aggregate supply curve affects the government's ability to use fiscal policy to change real GDP.
Purchase this Solution
Solution Summary
Multiplier and the Time Horizon are applied.
Solution Preview
Answers:
If the aggregate supply curve is very steep, it implies that the economy is close to the full employment situation. Because the vertical aggregate supply curve implies the situation of full employment. At this situation, when the government implements expansionary fiscal policies, then initially the aggregate demand curve will shift to right. But, when the aggregate supply curve is very steep, the increase in AD would result in greater increase in prices ...
Purchase this Solution
Free BrainMass Quizzes
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.