According to the short-run aggregate supply curve, firms are most likely to respond to an increase in aggregate demand by raising:
A)prices.
B)production.
C)both production and prices.
D)neither production nor prices.

Question

Quizplus · Accepted Answer

In the short run, firms typically respond to an increase in aggregate demand by increasing both production (to meet the higher demand) and prices (due to increased demand and potentially higher costs of production).

According to the Short-Run Aggregate Supply Curve, Firms Are Most