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Explain why the short-run aggregate supply curve is upward sloping.

Explain why the short-run aggregate supply curve is upward sloping.

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Solution:-The short-run aggregate supply curve is upward sloping mainly indicates the increase price levels when demand increases.The aggregate supply curve shows the relationship between the price level and the quantity of goods and services supplied in an economy.The SAS curve is upward sloping because firms tend to increase price levels when demand increases and because in auction markets there are upward sloping supply curves. There are two main theories to explain why the SAS curve is upward sloping and they are the sticky-wage model and the sticky-price model.

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