Answer to Question #227462 in Macroeconomics for SSJ

Question

List some empirical examples to support each theory which explains why the short-run aggregate supply curve is upward sloping.

Answer 1

In the short run, the aggregate supply curve slopes upwards due to:

• Quantity supplied rising as the price is increased.
• Capital is usually a fixed factor of production in the short run and labor is the variable factor . Level of quantity produced will increase as more labor is employed up to a certain level.
• An increase in output in turn increases the real GDP level.