In the short run, prices may rise faster than costs do. Supposing that labor and management agree...
Question:
In the short run, prices may rise faster than costs do. Supposing that labor and management agree to adjust wages continuously for any changes in the price level, how would such adjustments affect the slope of the aggregate supply curve?
Short-run Aggregate Supply Curve
The short run aggregate supply curve is upward sloping because there is positive relationship between quantity supplied of good and its price. In short, there are fixed factors and variable factors which affect the supply. The price level in short-run does not change as much as it changes in long run, where all are variable resources.
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Aggregate Supply in the Short Run
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Chapter 7 / Lesson 8
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Learn about the short-run aggregate supply curve in running businesses. Understand the supply curve for short-run aggregate supply in concept and through examples.
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