ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The aggregate supply curve slopes up because when the price level for outputs increases while the price level of inputs remains fixed, the opportunity for additional profits encourages more production.

Detailed explanation-2: -In the short run, the supply curve is fairly elastic, whereas, in the long run, it is fairly inelastic (steep). This has to do with the factors of production that a firm is able to change during these two different time intervals.

Detailed explanation-3: -A higher level of productivity shifts the SRAS curve to the right because with improved productivity, firms can produce a greater quantity of output at every price level.

Detailed explanation-4: -Under what conditions would an economy have a steep SRAS curve? It tells you that changes in real GDP are not possible, only changes in the price level. This happens at the full employment level when any increase in AD will only result in an increase in prices.