The positive relationship between the short-run aggregate supply function and the ________ suggests that,in the short run,firms produce more output as the price levels rises.
A)long-run aggregate supply
B)price level
C)demand for labour
D)inflation rate

Question

Quizplus · Accepted Answer

The short-run aggregate supply function shows the amount of output that firms are willing and able to produce at different price levels. As the price level increases, firms typically experience higher profit margins and are incentivized to increase production, leading to a positive relationship between the short-run aggregate supply and the price level. The other answer choices, such as the long-run aggregate supply, demand for labor, and inflation rate, are not directly related to the short-run aggregate supply function.

The Positive Relationship Between the Short-Run Aggregate Supply Function and the ________