Is it possible that the aggregate supply (AS) curve be negative? Why or why not?
1 Answer
Jul 27, 2015
Let's be clear that negative means downward sloping
we can notice it in 2 cases in the short run and the long run
Explanation:
In the short-run, the aggregate supply curve is upward sloping.(+ve) There are two main reasons why the quantity supplied increases as the price rises: The AS curve is drawn using a nominal variable, such as the nominal wage rate. In the short-run, the nominal wage rate is fixed.
In the long-run, only capital, labor, and technology affect the aggregate supply curve because at this point everything in the economy is assumed to be used optimally.
The long-run aggregate supply curve is perfectly vertical, which reflects economists' belief that the changes in aggregate demand only cause a temporary change in an economy's total output.
