How is the short-run Keynesian aggregate supply curve characterized?

The short-run Keynesian aggregate supply curve is characterized as horizontal because it suggests that prices remain relatively sticky, meaning they do not adjust immediately to changes in demand. In this scenario, when there is an increase in aggregate demand, firms can increase production without a corresponding increase in prices. This leads to a situation where output rises significantly as firms respond to higher demand by hiring more workers and utilizing existing capacities more intensively.

The horizontal nature reflects the idea that in the short run, with unused capacity (such as unemployed labor and idle factories), an increase in demand can lead to increased production without price increases. Therefore, firms are willing to produce more given that demand is on the rise, leading to higher output levels rather than higher price levels in the short run. This key concept helps illustrate why during periods of recession or economic downturn, economies tend to respond to increased demand without inflationary pressures initially.