Which of the following can explain the upward slope of the short-run aggregate supply curve?
A)nominal wages are slow to adjust to changing economic conditions
B)as the price level falls,the exchange rate falls
C)an increase in the money supply lowers the interest rate
D)an increase in the interest rate increases investment spending

Question

Quizplus · Accepted Answer

The upward slope of the short-run aggregate supply curve can be explained by the fact that nominal wages are slow to adjust to changing economic conditions. As a result, when the price level increases, firms can produce more output at a higher price without having to increase their labor costs immediately. This is why the short-run aggregate supply curve slopes upwards.

Which of the Following Can Explain the Upward Slope of the Short-Run