Suppose Firms Are Currently Producing Output at a Level Beyond

Multiple Choice

Suppose firms are currently producing output at a level beyond their normal capacity.In this situation,the AS curve will be relatively ________ and a positive AD shock will result in ________.

A) steep; an increase in the price level with a small increase in real GDP
B) flat; an equal increase in the price level and in real GDP
C) flat; a very small increase in prices but a large increase in real GDP
D) flat; a very small decrease in the price level and a decrease in real GDP
E) steep; a decrease in the price level and a very small decrease in real GDP