As the price level increases,the short-run aggregate supply curve
A)becomes increasingly steep.
B)begins to level out.
C)shifts inward.
D)does not change.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve becomes increasingly steep as the price level increases because, in the short run, as prices rise, firms are willing to produce more due to higher profits, but there are diminishing returns to the factors of production, making it increasingly costly to expand output further.

As the Price Level Increases,the Short-Run Aggregate Supply Curve