The slope of the short-run aggregate supply curve can be explained by
A) the fact that all prices are sticky in the short run.
B) sticky input prices and flexible output prices.
C) flexible input prices and sticky output prices.
D) the fact that all prices are flexible in the short run.
E) the fact that all prices except wages are flexible in the short run.

Question

Quizplus · Accepted Answer

The slope of the short-run aggregate supply curve can be explained by sticky input prices and flexible output prices. In the short run, input prices (such as wages and raw materials) may be sticky or slow to adjust, while output prices (such as the prices of goods and services) may be more flexible. As a result, changes in demand for goods and services will affect the level of production in the short run, leading to a positive slope for the short-run aggregate supply curve.

The Slope of the Short-Run Aggregate Supply Curve Can Be