In the new classical equation for the relationship between actual output and the full employment level of output, if the coefficient alpha were equal to zero aggregate output would only differ from its full-employment level if the actual price level did not equal the expected price level. the short-run aggregate supply curve would have no slope. aggregate output would always be at full-employment level. the short-run aggregate supply curve would slope downwards.

In the new classical equation for the relationship between actual output and the full employment level of output, if the coefficient alpha were equal to zero aggregate output would only differ from its full-employment level if the actual price level did not equal the expected price level. the short-run aggregate supply curve would have no slope. aggregate output would always be at full-employment level. the short-run aggregate supply curve would slope downwards.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter14: Aggregate Demand And Supply

Section: Chapter Questions

Problem 1SQP

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