The short-run aggregate supply curve:
A)has the same slope as the LRAS.
B)shifts only when the LRAS shifts in the same direction.
C)normally slopes upward to the right because the costs of labor and other inputs are relatively fixed in the short run.
D)normally has a slope of zero, meaning the curve is horizontal.

Question

The short-run aggregate supply curve:
A)​has the same slope as the LRAS.
B)​shifts only when the LRAS shifts in the same direction.
C)​normally slopes upward to the right because the costs of labor and other inputs are relatively fixed in the short run.
D)​normally has a slope of zero, meaning the curve is horizontal.

Quizplus · Accepted Answer

The short-run aggregate supply curve normally slopes upward to the right because the costs of labor and other inputs are relatively fixed in the short run. Therefore, as prices increase, firms are able to increase their output in the short run, but the costs of inputs do not increase proportionately, leading to higher profits for the firms. Choices A, B, and D are incorrect statements.

The Short-Run Aggregate Supply Curve