If the price level kept increasing, the short-run aggregate supply (SRAS) curve would get steeper because
A) all the unemployed would eventually be hired.
B) there are limits to how long workers can work long hours and capital can go without proper maintenance.
C) the rate at which capacity can be expanded increases indefinitely.
D) the long-run aggregate supply curve is horizontal.

Question

Quizplus · Accepted Answer

In the short run, when the price level increases, firms increase output by utilizing their existing resources, such as labor and capital, more intensively. However, as the price level continues to increase, there are limits to how long workers can work long hours and how much capital can go without proper maintenance. Therefore, the SRAS curve becomes steeper to reflect the diminishing marginal returns to labor and capital.

If the Price Level Kept Increasing, the Short-Run Aggregate Supply