In the upward-sloping region of the aggregate supply curve, higher price levels provide an incentive for firms to produce additional real output.

Question

Quizplus · Accepted Answer

In the upward-sloping region of the aggregate supply curve, as price levels increase, firms are incentivized to increase production because the higher prices can lead to higher profits, assuming costs do not increase at the same rate.

In the Upward-Sloping Region of the Aggregate Supply Curve, Higher