Answer to Question #105427 in Macroeconomics for mackenzie

Question

in the short run, the aggregate supply curve has a positive slope because?

Answer 1

In the short-run, the aggregate supply curve is usually upward sloping or a positive slope because the quantity supplied of commodity increases when the price also increases. Only one factor of production is fixed in the short-run and in most cases, it is capital. When the aggregate supply curve moves outward, the output and real GDP increase at a given price. These shifts cause a positive correlation between the price level and output.