The aggregate supply curve (short run)

Question

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The short-run aggregate supply curve is typically represented as steeper above the full-employment output level because it is assumed that prices can adjust more easily when the economy is operating at or near full capacity, leading to less output response for a given increase in price level. Below full-employment output, prices and wages are more sticky downwards, leading to a flatter curve as output can increase without significant increases in the price level.

The Aggregate Supply Curve (Short Run)