The Short-Run Aggregate Supply Curve Slopes

question 115

Multiple Choice

The short-run aggregate supply curve slopes:

• A)​downward because firms can sell more, and hence, will produce more when prices are lower.
• B)​downward because firms find it costs less to purchase labor and other inputs when prices are lower and hence, they produce more.
• C)​upward because firms normally can purchase some labor and other inputs at fixed costs for some period of time.
• D)​upward because firms find that it costs more to purchase labor and other inputs when prices are higher and hence they must produce and sell more in order to make a profit.

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Definitions:

Accruals

Accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash transaction takes place.

Unrecorded Expense

An expense that has been incurred but not yet documented or reported in the accounting records.

Unrecorded Revenue

Revenue that has been earned but has not yet been documented in the accounting records.

Revenues

The income generated from normal business operations, often from the sale of goods and services to customers.