To determine short-run equilibrium in the economy, we use an aggregate supply curve that is

Question

Quizplus · Accepted Answer

In the short run, the aggregate supply curve is upward sloping. This means that the level of aggregate output (real GDP) firms are willing to produce is positively related to the general price level. As prices increase, firms are willing to increase their output to take advantage of higher profits. This relationship allows us to determine short-run equilibrium by finding the point where aggregate demand intersects with the upward-sloping aggregate supply curve.

To Determine Short-Run Equilibrium in the Economy, We Use an Aggregate