An aggregate supply curve that is either horizontal or upward sloping,depending on whether the absolute price level increases as firms produce more output is called:
A)short-run aggregate supply curve.
B)long-run aggregate supply curve.
C)potential GDP.
D)NAIRU.

Question

Quizplus · Accepted Answer

A horizontal or upward sloping aggregate supply curve is characteristic of the short-run, where factors of production are fixed, and firms can increase output by using existing resources more efficiently. As firms produce more, their production costs may increase, resulting in an upward-sloping supply curve. In the long-run, all factors of production are variable, and the aggregate supply curve becomes vertical, indicating that changes in the price level do not impact the economy's productive capacity. Therefore, option A, short-run aggregate supply curve, is the correct answer. Option B is incorrect because the long-run aggregate supply curve is always vertical. C and D are also incorrect because they do not pertain to the concept described in the question.

An Aggregate Supply Curve That Is Either Horizontal or Upward