Question

Which of the followinThe IS-LM can be viewed as a special case of the AS-AD model where:

a. the short run aggregate supply curve is flat
b. the short run aggregate supply curve does not exist
c. there is only a short run aggregate supply curve if shocks are unexpected
d. the short run aggregate supply curve is verticalg statements is true

Answer 1

Short run aggregate supply curve is flat ( A )

Step-by-step explanation:

The special case of the AS-AD following the IS-LM is that the short run aggregate supply curve is flat

This is because in an AS-AD model the price level is constant and AD represents an equilibrium point along IS-LM model, hence the price been constant, shows that in short run aggregate supply curve will be flat.