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Why does the failure of workers and firms to accurately predict the price level result in an​ upward-sloping aggregate supply​ curve?

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Answer: The correct answer is : Because menu costs and contracts become fixed and companies tend to be slow to adjust wages.

Explanation: The cost of the menu is the cost of changing prices for companies. The widespread use of computers and the internet has reduced menu costs. If the menu costs are eliminated, the short-term supply curve will be of positive slope.

User Hoytman
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