Help with this economics problem for grad class

L

leilanikiri

When the short-run aggregate supply curve is steep, then for a given increase in aggregate demand,

a. the increase in real GDP will be relatively large and the increase in the price level will be relatively small
b. the increases in real GDP and the price level will be small
c. the increase in real GDP will be relatively small and the increase in the price level will be relatively large
d. the decrease in real GDP will be larger than the decrease in the price level
e. the increases in real GDP and the price level will be large
 
Quote from leilanikiri:

When the short-run aggregate supply curve is steep, then for a given increase in aggregate demand,

a. the increase in real GDP will be relatively large and the increase in the price level will be relatively small
b. the increases in real GDP and the price level will be small
c. the increase in real GDP will be relatively small and the increase in the price level will be relatively large
d. the decrease in real GDP will be larger than the decrease in the price level
e. the increases in real GDP and the price level will be large
More...

C

real gdp is on horizontal axis (is same as Q). P is on vertical axis. Imagine a nearly vertical supply curve. Move the demand curve rightward. New eq point is much higher price level movement than Q change. In a purely vertical supply curve, no new production results, just inflation.

As evidenced by QE, some supply curves are a lot more inelastic than others. And in some markets (ie nat gas), supply curves shifted right/downward for other reasons (shale supplies) despite money supply increases moving agg demand rightward (or at least offsetting contraction to some extent).
 
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