Respuesta :
Since many companies' cost components are fixed in the short term, price increases temporarily improve profit margins. This explains why rising prices in markets for goods and services lead to a slope of the short-run aggregate supply curve.
What is the Aggregate Supply Curve?
An economy's real GDP performance is represented by the aggregate supply curve at various price levels. The method of constructing the aggregate supply curve is different from the method of constructing the supply curve for all goods and services. The goods and services produced by the economy are called aggregate supply. The behavior of the short-run aggregate supply curve is affected by changes in inflation expectations, differences in labor and capital stocks, changes in government activity (as opposed to government spending), changes in productivity, and supply shocks. Four production-related factors are the main drivers: labor, capital goods, natural resources and entrepreneurship. Increased availability of financial capital improves these factors.
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The correct question is :
Which of the following explains why higher prices in the goods and services market will lead to an upward sloping short-run aggregate supply curve?
a. The higher prices will improve technology and, thereby, stimulate additional output.
b. The higher prices will temporarily improve profit margins because many of the cost components of firms will be fixed in the short run.
c. The higher prices will reduce the purchasing power of the fixed quantity of money and, thereby, stimulate additional output.d. The higher prices will expand the economy's resource base and, thereby, stimulate additional output.
