The short-run aggregate supply curve:
A) Is vertical and the long-run aggregate supply curve is vertical
B) Slopes upward and the long-run aggregate supply curve also slopes upward
C) Slopes upward, but the long-run aggregate supply curve is horizontal
D) Slopes upward, but the long-run aggregate supply curve is vertical

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve slopes upward because prices and wages are sticky, meaning they do not adjust immediately to changes in economic conditions. In the long run, however, prices and wages are flexible, and the long-run aggregate supply curve is vertical, reflecting the economy's potential output at full employment.

The Short-Run Aggregate Supply Curve