In the short run, the aggregate supply curve is:
A) vertical.
B) horizontal.
C) upward sloping.
D) downward sloping.

Question

Quizplus · Accepted Answer

In the short run, the aggregate supply curve is upward sloping because it takes time for firms to adjust their production levels in response to changes in demand or input prices. As a result, output can increase in the short run if there is excess demand for goods and services, but eventually, firms will hit capacity constraints and output will be limited by the availability of inputs. Thus, the short-run aggregate supply curve slopes upward.

In the Short Run, the Aggregate Supply Curve Is