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Subject - Economics:

Macroeconomics

MCQ - 48-4058

Question:

Some economists believe that when aggregate demand declines, prices are inflexible or “sticky” in the downward direction. This implies that the short-run aggregate supply curve is

  1. upward sloping at full employment.
  2. horizontal below full employment.
  3. vertical at full employment.
  4. horizontal below full employment.
  5. vertical above full employment.

Correct Answer: B

Explanation:

If AD is falling and prices are not also falling, the AS curve must be horizontal. Keynesians believe that prices are sticky in the downward direction, but Classical economists believe prices are flexible. It is no surprise that the classical AS curve is vertical.

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269 MCQ for effective preparation of the test of Macroeconomics of Economics section.

Read the MCQ statement: Some economists believe that when aggregate demand declines, prices are inflexible or “sticky” in the downward direction. This implies that the short- .... supply curve is , keenly and apply the method you have learn through the video lessons for Macroeconomics to give the answer. Record your answer and check its correct answer and video explanation for MCQ No. 48-4058.

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Solve the question for MCQ No. and decide which option (A through D/E) is the best choice to answer the MCQ, then click/tap the blue button to view the correct answer and it explanation.

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