All explanations for the upward slope of the short-run aggregate supply curve suppose that the quantity of output supplied increases when the actual price level exceeds the price level that was expected.

Question

Quizplus · Accepted Answer

This is true because when the actual price level is greater than the expected price level, firms are willing to supply more output to take advantage of the higher prices and increase their profits. This can happen due to factors such as increases in input prices, shortages in inputs, or changes in technology that make it more costly to produce output. As a result, the short-run aggregate supply curve slopes upward.

All Explanations for the Upward Slope of the Short-Run Aggregate