In the short run, the aggregate supply curve is
A) horizontal.
B) negatively sloped.
C) positively sloped.
D) vertical.

Question

Quizplus · Accepted Answer

In the short run, the aggregate supply curve is usually positively sloped because firms are able to adjust their output levels more easily in response to changes in demand than they are able to adjust their input prices. If demand increases, firms can increase their output by hiring additional workers, using more equipment, or working longer hours, but they may not be able to negotiate higher wages or purchase inputs at lower prices immediately. This means that output can increase without leading to higher input costs, which results in a positively sloped aggregate supply curve.

In the Short Run, the Aggregate Supply Curve Is