It is argued that short-run aggregate supply curves slope upward to the right because
A) short-run price levels are inversely related to individual product prices.
B) falling profits force firms to increase prices.
C) in the short run, wages and raw material prices tend to rise less rapidly than product prices.
D) as price rises, demand falls.
E) increases in aggregate supply cause prices to rise.

Question

Quizplus · Accepted Answer

In the short run, wages and raw material prices tend to rise less rapidly than product prices, allowing firms to increase production and supply more goods at higher prices, leading to an upward-sloping short-run aggregate supply curve.

It Is Argued That Short-Run Aggregate Supply Curves Slope Upward