The Short-Run Aggregate Supply Curve (SRAS) Slopes Upward to the Right

question 117

Multiple Choice

The short-run aggregate supply curve (SRAS) slopes upward to the right because unexpected increases in prices will

• A) increase aggregate demand as consumers buy more.
• B) decrease aggregate demand as consumers buy less.
• C) cause firms to expand output since the higher product prices will improve profitability.
• D) cause firms to reduce output since the higher product prices will decrease profit margins.

---

Definitions:

Inventory

The goods and materials a business holds for the ultimate goal of resale or production.

Amortization

The process of spreading out a loan into a series of fixed payments over time, which includes both principal and interest.

Patent

An exclusive right granted for an invention, which allows the patent owner to exclude others from making, using, or selling the invention.

Book Value

The difference between the total assets and total liabilities of a company, indicating its net asset value as recorded on the balance sheet.