The short-run aggregate supply curve has a ________ slope because as prices of ________ rise, prices of ________ rise more slowly.
A)positive; final goods and services; inputs
B)vertical; final goods and services; inputs
C)positive; inputs; final goods and services
D)vertical; inputs; final goods and services

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve has a positive slope because, in the short run, as the prices of final goods and services rise, the prices of inputs (like labor and raw materials) tend to rise more slowly. This difference in how quickly prices adjust leads to an increase in production by firms, hence the positive slope.

The Short-Run Aggregate Supply Curve Has a ________ Slope Because