As shown in the diagram to the right, the short-run aggregate supply curve (AS)

Question

As shown in the diagram to the right, the short-run aggregate supply curve (AS) is upward-sloping. This positive slope is explained in part by the fact that AS 0 A, in the short-run, input prices-particularly wage rates-are slower to adjust to increasing aggregate demand than are output prices. input price increases cause firms to raise their prices. in the short-run, output prices are slower to adjust to increasing aggregate demand than are input prices. business owners are more intelligent than other resource owners. B. ° C. D. 02 Aggregate output (income), Y

Explanation / Answer

The correct answer is : A)

Reason: As per the Keynesian view, in short run input prices, particularly wages are sticky i.e. slow to adjust due to contractual obligations and thus the supply curve generated is upward rising.

Thanks!

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.