The short run aggregate supply curve refers to a period in which input prices have not yet had time to adjust to changes in aggregate demand.

Question

Quizplus · Accepted Answer

In the short run, input prices are fixed or sticky, meaning they have not yet had time to fully adjust to changes in aggregate demand. Therefore, the short run aggregate supply curve is upward sloping, indicating that an increase in aggregate demand leads to an increase in output and prices in the short run. However, in the long run, input prices are flexible and can adjust fully, resulting in a vertical long run aggregate supply curve.

The Short Run Aggregate Supply Curve Refers to a Period