Which of the following statements about the short-run aggregate supply curve is most accurate?
A)It shifts only when the LRAS shifts in the same direction.
B)It is not as steeply sloped as the LRAS.
C)It normally has a slope of zero, meaning the curve is horizontal.
D)It normally slopes upward to the right because the costs of labour and other inputs are relatively fixed in the short run.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve normally slopes upward to the right because the costs of labor and other inputs are relatively fixed in the short run. This means that as output increases, firms must pay higher prices for inputs and therefore have higher production costs, leading to a higher price level for output. Option A is incorrect because the short-run aggregate supply curve can shift because of changes in factors such as input prices or technology. Option B is also incorrect because the short-run aggregate supply curve is generally steeper than the long-run aggregate supply curve (LRAS). Option C is incorrect because the slope is usually positive, not zero.

Which of the Following Statements About the Short-Run Aggregate Supply