During periods of low inflation, the short-run aggregate supply curve is:
A) vertical.
B) horizontal.
C) upward sloping.
D) downward sloping.

Question

Quizplus · Accepted Answer

During periods of low inflation, the short-run aggregate supply curve is typically upward sloping. This reflects the idea that as the price level increases, producers are willing and able to supply more goods and services, partly due to increased profitability and possibly due to nominal wage rigidity.

During Periods of Low Inflation, the Short-Run Aggregate Supply Curve