In the short run, a rise in the overall price level generally causes real output supplied to
Correct answer: A. Increase along an upward-sloping aggregate supply curve
- A. Increase along an upward-sloping aggregate supply curve
- B. Decrease along a downward-sloping aggregate supply curve
- C. Remain fixed at zero because prices are flexible
- D. Increase only when the money supply falls
Explanation
In the short run, some wages and input costs adjust slowly, so firms may supply more output when the price level rises. This gives the short-run aggregate supply curve a positive slope.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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