Question
The short-run aggregate supply curve represents circumstances where
Multiple Choice
both input and output prices are fixed.
both input and output prices are flexible.
input prices are fixed, but output prices are flexible.
input prices are flexible, but output prices are fixed.
Multiple Choice
both input and output prices are fixed.
both input and output prices are flexible.
input prices are fixed, but output prices are flexible.
input prices are flexible, but output prices are fixed.
Answers
GPT-4o mini
The correct choice is:
**input prices are fixed, but output prices are flexible.**
In the short run, some input prices, such as wages or the prices of raw materials, may not adjust immediately to changes in market conditions, while output prices can change more freely in response to demand. This is what leads to the upward-sloping nature of the short-run aggregate supply (SRAS) curve.
**input prices are fixed, but output prices are flexible.**
In the short run, some input prices, such as wages or the prices of raw materials, may not adjust immediately to changes in market conditions, while output prices can change more freely in response to demand. This is what leads to the upward-sloping nature of the short-run aggregate supply (SRAS) curve.