ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The aggregate supply curve is horizontal because of the assumption of contractual agreement. The contract shows the input and output price; the price does not change along the immediate-short-run aggregate supply curve.

Detailed explanation-2: -The short-run aggregate supply curve has a horizontal shape. This means that production can be increased in the short-run to meet extra demand without any increase in the price of the product.

Detailed explanation-3: -The short-run aggregate supply curve is an upward-sloping curve that shows the quantity of total output that will be produced at each price level in the short run. Wage and price stickiness account for the short-run aggregate supply curve’s upward slope.

Detailed explanation-4: -Answer and Explanation: A horizontal aggregate supply curve means producers will not supply goods at a lower price anymore. Any government stimulus or growth in the economy will just increase output. This means the economy has a lot of productive capacity left unutilized.

Detailed explanation-5: -The short-run aggregate supply curve is an upward slope. The short-run is when all production occurs in real time. The long-run curve is perfectly vertical, which reflects economists’ belief that changes in aggregate demand only temporarily change an economy’s total output.