The short-run aggregate supply curve is positively sloped because wages and prices are not all completely flexible.

Question

Quizplus · Accepted Answer

In the short run, wages and some prices are typically sticky or inflexible, leading to a positive slope of the short-run aggregate supply curve. As input prices increase, firms are willing to produce more in the short run, but eventually, as wages and prices adjust more fully, they will reach their long-run equilibrium values and the aggregate supply curve will become vertical.

The Short-Run Aggregate Supply Curve Is Positively Sloped Because Wages