The aggregate supply curve has its particular shape because of which of the following explanations?
A) An increase in the nominal wage causes a decrease in the amount of output that firms are willing to produce.
B) An increase in the aggregate price level will cause an increase in the interest rate and a decrease in output.
C) An increase in output causes an increase in employment, a decrease in unemployment, an increase in the nominal wage and an increase in the price level.
D) A decrease in output causes a decrease in employment, a decrease in unemployment, an increase in the nominal wage and an increase in the price level.
E) A decrease in the aggregate price level causes a decrease in nominal money demand and a decrease in the interest rate.

Question

Quizplus · Accepted Answer

The aggregate supply curve is upward sloping because as output increases, employment rises, unemployment falls, nominal wages increase, and the price level increases, reflecting the positive relationship between output and price level in the short run.

The Aggregate Supply Curve Has Its Particular Shape Because of Which