The short-run aggregate supply curve
A) is vertical.
B) has a negative slope.
C) has a positive slope.
D) is horizontal.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve has a positive slope because, in the short run, as prices increase, the quantity of goods and services that firms are willing to produce and sell typically increases. This is due to factors like menu costs, wage stickiness, and misperceptions about relative prices, which can make it profitable for firms to increase output when the price level rises.

The Short-Run Aggregate Supply Curve