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.

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Definitions:

Products

Substances that are formed as a result of a chemical reaction, found on the right side of a chemical equation.

Constant Temperature

A condition or process that occurs at an unchanging temperature, regardless of other varying factors.

Chemical Reaction

A process that involves rearrangement of the molecular or ionic structure of a substance, as opposed to a change in physical form or a nuclear reaction.

Constant Pressure

A condition or process in which the pressure remains unchanged over time.