The aggregate supply curve is:
A) always vertical.
B) always horizontal.
C) a summation of individual supply curves and is always upward sloping.
D) horizontal, vertical and upward sloping.

Question

Quizplus · Accepted Answer

The aggregate supply curve can take different shapes depending on the time frame and economic conditions. In the short run, it can be upward sloping, indicating that an increase in prices can lead to an increase in output. In the very short run, it might be horizontal, suggesting that the economy can produce more without changing the price level, especially under conditions of high unemployment or idle resources. In the long run, it is vertical, reflecting the idea that the economy's output is determined by factors other than the price level, such as technology and resources. Therefore, the aggregate supply curve can be horizontal, vertical, and upward sloping, depending on the context.

The Aggregate Supply Curve Is