In the “real world” prices are not fixed, and hence the aggregate supply curve is not completely horizontal with a slope of zero. In order to illustrate why it is that aggregate supply curves slope up and to the right, Keynes made two crucial assumptions about the operation of the labor market. What were those two assumptions?

In the “real world” prices are not fixed, and hence the aggregate supply curve is not completely horizontal with a slope of zero. In order to illustrate why it is that aggregate supply curves slope up and to the right, Keynes made two crucial assumptions about the operation of the labor market. What were those two assumptions?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter20: Aggregate Demand And Supply

Section20.A: The Self Correcting Aggregate Demand And Supply Model

Problem 6SQ

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