Economics Q108

0. If rents were automatically adjusted for changes in the price level, the shortrun aggregate supply curve would most likely be:

  • Option : B
  • Explanation : The slope of the short-run aggregate supply curve reflects the extent to which rents and other input costs adjust to the overall price level. With automatic adjustment of rent, firms will not adjust output as much in response to changing output prices. Hence the SRAS curve will be steeper.
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