The short-run aggregate supply curve is positively sloped because
A) real interest rates rather than nominal rates are used.
B) some price adjustments take place in the short-run.
C) no price adjustments take place in the short-run.
D) complete price adjustments take place in the short-run.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve is positively sloped because some price adjustments take place in the short-run. In the short-run, input prices may not adjust immediately to changes in output prices, causing producers to supply more at higher output prices and less at lower output prices. This leads to a positively sloped short-run aggregate supply curve.

The Short-Run Aggregate Supply Curve Is Positively Sloped Because