What is the Short Run Aggregate Supply curve and why is it upwards sloping?
Aggregate Supply is the total amount of real output produced in an economy in a given year. The Short Run Aggregate Supply (SRAS) curve looks as aggregate supply in the short run: the time period where all resource prices (wages and prices of factors of production) are constant. In the short run, the curve has an upwards slope: a positive relationship between the general price level and GDP. This is due to profitability, as if the price level increases when other factor prices are held constant, firms profits increase leading them to increase their output, represented by an upwards movement along the SRAS curve.
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