Asked by
Hannah Carter
on Nov 11, 2024Verified
If resource prices are "sticky" downward and a recessionary gap develops,the short-run aggregate supply curve will:
A) shift leftward to return the economy to its potential output.
B) shift rightward to return the economy to its potential output.
C) become a horizontal straight line.
D) not shift rightward to return the economy to its potential output.
E) become the long-run aggregate supply curve.
Recessionary Gap
A situation in macroeconomics where actual output is less than the potential output of an economy, often marked by high unemployment.
Short-Run Aggregate Supply
The total supply of goods and services that firms in an economy plan on selling during a specific time period, assuming that the prices of inputs remain constant.
Sticky Prices
Refers to the resistance of prices to change, despite shifts in the broader economy or a product's supply and demand.
- Explain the effect of variable resource prices on the balance of economic markets.
- Analyze the effects of actual production levels not aligning with their potential.
Verified Answer
DP
Learning Objectives
- Explain the effect of variable resource prices on the balance of economic markets.
- Analyze the effects of actual production levels not aligning with their potential.