The aggregate supply curve is upward sloping in the short-run because of the Profit effect which says the rate of output will increase as the price level increases.Profit effect which says higher input costs will cause an increase in the rate of output.Cost effect which says the rate of output will increase if production costs increase.Cost effect which says higher input costs will cause an increase in the rate of inputs.Inflation effect which says that everything costs more because U.S. debt is so large.

Answered: The aggregate supply curve is upward…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The aggregate supply curve is upward sloping in the short-run because of the

Profit effect which says the rate of output will increase as the price level increases.
Profit effect which says higher input costs will cause an increase in the rate of output.
Cost effect which says the rate of output will increase if production costs increase.
Cost effect which says higher input costs will cause an increase in the rate of inputs.
Inflation effect which says that everything costs more because U.S. debt is so large.

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