Which of the following is an explanation of why the aggregate supply curve slopes upward,assuming the price level increases?
A) The purchasing power of money decreases and businesses buy fewer goods
B) The costs of production increase in the short run and profits become smaller
C) Production costs increase and producers charge higher prices for their goods
D) The demand for loans decreases so interest rates decline and businesses borrow more money

Question

Quizplus · Accepted Answer

As the price level increases, production costs increase due to higher input prices such as labor, raw materials, and energy. Producers respond by charging higher prices for their goods in order to maintain their profit levels. This results in an upward sloping aggregate supply curve.

Which of the Following Is an Explanation of Why the Aggregate