If the price level kept increasing,the short-run aggregate supply 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

As the price level increases, firms' profits increase, which encourages them to produce more in the short run. However, there are limits to how much workers can work and how long capital can go without proper maintenance. Eventually, as firms try to produce more and more in the face of these constraints, the cost of production will rise, causing the short-run aggregate supply curve to become steeper. Choice A is not necessarily true, as even at high price levels, there may still be some unemployed workers. Choice C is not true, as there are always limits to how much capacity can be expanded in the short run. Choice D is not directly relevant to the question of the shape of the short-run aggregate supply curve.

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