During the late 1990s in the United States, aggregate demand rose sharply but the price level increased much more slowly. This might be because during this period, firms:
A. increased their markups in the face of higher aggregate demand, causing the short-run aggregate supply curve to be steeper.
B. were reluctant to increase their markups in the face of higher aggregate demand, causing the short-run aggregate supply curve to be flatter.
C. increased their markups in the face of higher aggregate demand, causing the short-run aggregate supply curve to be flatter.
D. were reluctant to increase their markups in the face of higher aggregate demand, causing the short-run aggregate supply curve to be steeper.
Answer: B
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