What is happening at the horizontal section of aggregate supply (AS)?

Question

BlackTom AI · Accepted Answer

In the Keynesian view, the horizontal (flat) section of the aggregate supply (AS) curve corresponds to an economy operating well below potential output with many idle resources. Wages and prices are "sticky" downward in this range, so firms respond to higher aggregate demand by increasing real output and employment rather than by raising the general price level.

Step-by-step reasoning:
1. Knowledge points: The AS curve has three conceptual ranges — horizontal (Keynesian), upward-sloping (intermediate), and vertical (classical). The horizontal range occurs at low levels of output/unemployment; prices are rigid and firms have spare capacity. Aggregate demand (AD) increases here raise output without changing the price level.
2. Apply to the choices: If AS is horizontal, firms can expand production using existing unused capital and unemployed labor. That implies there are a lot of unused resources available for production to rise.
3. Logical consequences: Because resources are idle, marginal cost pressures are low; firms hire more and increase output rather than increase prices. Thus output can and does increase when AD rises in this range.
4. Why the correct option is correct: "there are a lot of unused resources" captures the defining feature of the horizontal section — substantial unemployment and unused capital allow output expansion without price increases.

Why other options are incorrect:
- "total output cannot increase" is false: in the horizontal Keynesian range, output can increase substantially as AD rises.
- "there is little spare production capacity" contradicts the defining condition of the horizontal range; in fact spare capacity is large.
- "all of these" is wrong because the other statements are incorrect or inconsistent with the horizontal AS.

Conclusion: The correct answer is "there are a lot of unused resources," which matches the provided answer.

What is happening at the horizontal section of aggregate supply (AS)?单项选择题

类似问题

Which is expansionary monetary policy?

Expansionary monetary policy in an open economy with a floating exchange rate is:

Expansionary monetary policy in an open economy with a floating exchange rate will likely ____ a trade deficit.

14. The kind of products that cultural entrepreneurs create are usually Answer Question 12[input].

Listen to this mini-lecture on cultural entrepreneurship, and answer the following questions. Question 13 and 14. Fill in the gaps with ONE OR TWO WORDS from the mini-lecture. 13. Cultural entrepreneurship aims to support and maintain Answer Question 11[input].

Question 11 and 12. Choose A, B or C as the best answer. 11. As role models, human teachers:

According to FSANZ’s Plain English Allergen Labelling (PEAL), which of the following statements is compliant for a product containing egg?

What is the time limit for this pre-test?

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单