The more 'sticky' nominal wages and other input costs are, the steeper the slope of the
aggregate supply curve and therefore, the less effective demand side policies in terms of
effecting real output.
If the US economy is growing faster that the rest of the world, then we would expect a surge
in US exports.
Suppose that expected inflation is 5% and thus, nominal wages rise, along with all other
input prices by 5%. Suppose also, that actual inflation over this period was only 2%. In terms
of the behavior of the short-run aggregate supply curve, it would shift up given the
expectations of higher inflation and then shift downward to adjust for the actual rate of
The more sensitive consumption is to real wealth, the steeper the aggregate demand curve.