What does the steepness of the short-run aggregate supply curve depend on?
A) a larger-than-expected simple multiplier
B) a smaller-than-expected simple multiplier
C) the increase in labour costs as output expands
D) how sharply production costs increase as output expands

Question

What does the steepness of the short-run aggregate supply curve depend on?  
A) a larger-than-expected simple multiplier 
B) a smaller-than-expected simple multiplier 
C) the increase in labour costs as output expands 
D) how sharply production costs increase as output expands

Quizplus · Accepted Answer

The steepness of the short-run aggregate supply curve depends on how sharply production costs increase as output expands. If production costs increase sharply as output expands, then the SRAS curve will be relatively steep.

What Does the Steepness of the Short-Run Aggregate Supply Curve