Question

user for a given increase in aggregate demand, the steeper the slope of the short-run aggregate supply curve, the is the increase in the price level and the is the multiplier effect on real gdp in the short run. choose the correct option to fill in the blanks. a. larger smaller b. larger larger c. smaller, larger d. smaller, smaller

Answer 1

In the given scenario, a steeper slope of the short-run aggregate supply curve leads to a smaller increase in the price level and a larger multiplier effect on real GDP in the short run.

Step-by-step explanation:

In the given scenario, the steeper the slope of the short-run aggregate supply (SRAS) curve, the smaller the increase in the price level and the larger the multiplier effect on real GDP in the short run.

When the SRAS curve is steeper, a given increase in aggregate demand will lead to a smaller increase in the price level. This is because a steeper SRAS curve indicates that the economy can produce more output without experiencing significant increases in prices. Additionally, the larger multiplier effect on real GDP occurs because a steeper SRAS curve implies that changes in aggregate demand have a greater impact on output.