Explain the difference between short-run and long-run aggregate supply and what causes each to shift.

Explain the difference between short-run and long-run aggregate supply and what causes each to shift.

• A. SRAS is vertical; LRAS is upward-sloping; shifts depend on consumer behavior.
• B. SRAS is vertical; LRAS is horizontal; both shift with only monetary policy.
• C. SRAS is upward-sloping in the short run due to sticky wages/prices; LRAS is vertical at potential output; SRAS shifts with input prices, technology, expectations; LRAS shifts with resources, technology, or institutions.
• D. SRAS and LRAS are both upward-sloping; only LRAS shifts with price changes.

Answer: (C)