One reason that explains why the short-run aggregate supply curve is upward sloping is:
A) sticky wages.
B) cartels keeping prices artificially high.
C) the lag involved with public policy making.
D) the changing profit levels experienced by firms.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve is upward sloping mainly because of sticky wages. This means that nominal wages are slow to adjust to changes in the overall price level, resulting in a situation where firms face higher production costs when prices increase but their workers' wages do not adjust immediately. As a result, firms are willing to supply more output only when they can charge higher prices to cover these higher costs.

One Reason That Explains Why the Short-Run Aggregate Supply Curve