The short-run aggregate supply curve shows the _____ relationship between the inflation rate and real growth during the period when prices and wages are _____.
A) positive;flexible
B) positive;sticky
C) negative;flexible
D) negative;sticky

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve shows a positive relationship between the inflation rate and real growth because, in the short run, as demand for goods and services increases, prices tend to rise before wages adjust. This period is characterized by "sticky" wages and prices, meaning they do not adjust immediately to changes in economic conditions.

The Short-Run Aggregate Supply Curve Shows the _____ Relationship Between