Most economists believe that the aggregate supply curve is
A) upward-sloping in the short run, but vertical in the long run.
B) upward-sloping in the long run, but vertical in the short run.
C) upward-sloping in both the short run and the long run.
D) vertical in both the short run and the long run.

Question

Quizplus · Accepted Answer

Most economists believe that the aggregate supply curve is upward-sloping in the short run, meaning that as the price level increases, firms are willing to produce more output. However, in the long run, the aggregate supply curve becomes vertical because in the long run, input prices adjust to changes in output prices, so the increase in output leads to an increase in input prices, which offsets the initial increase in profits.

Most Economists Believe That the Aggregate Supply Curve Is