Answered

Why is there a need for a
distinction between the short-
run and long-run aggregate
supply curves?
A. Achieving high levels of output is
possible in the long-run but impossible in
the short-run.
B. In the short-run there is a negative
relationship between the average price
level and real output.
C. In the short-run aggregate supply does
not intersect aggregate demand but it does
in the long-run.
D. Pushing for high levels of output is
possible in the short-run but is
unsustainable in the long-run.



Answer :

Certainly! The distinction between the short-run and long-run aggregate supply curves is important for understanding the behavior of an economy over different time frames.

Here are the reasons for the need for a distinction:

1. In the short run, there can be factors like fixed input levels or sticky prices that impact the economy's ability to adjust fully. This can lead to a different shape for the aggregate supply curve compared to the long run.

2. In the short run, the aggregate supply curve can be relatively flat or upward sloping due to firms being able to increase production without raising prices quickly. However, in the long run, firms may face higher costs and have less flexibility to expand output without price increases.

3. Understanding the distinction helps policymakers make better decisions. For example, they can use different tools to address short-run issues like demand management policies while focusing on long-run factors such as productivity and investments for sustainable growth.

In essence, the distinction between short-run and long-run aggregate supply curves provides insights into how an economy responds to changes over different time horizons and guides decision-making for economic policies.