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Hannah Carter
on Nov 11, 2024

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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.
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Devon PriceNov 15, 2024
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