The short-run aggregate supply curve
A) is downward sloping.
B) shows many input costs are quick to change to keep the economy at full employment.
C) exhibits a positive relationship between the aggregate price level and aggregate output.
D) shows input costs remaining constant, as firms have a lot of excess capacity.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve exhibits a positive relationship between the aggregate price level and aggregate output, meaning as prices increase, the quantity of goods and services firms are willing to supply also increases. This is because in the short run, some costs (like wages and raw materials) may not adjust immediately, allowing firms to increase production and profits as prices rise.

The Short-Run Aggregate Supply Curve