Within the framework of the AS/AD model, which of the following is a true statement regarding short-run aggregate supply?
a. An increase in prices temporarily improves profit margins because important components of costs are fixed in the short run.
b. An increase in prices leads to higher interest rates, which temporarily improves profit margins.
c. An increase in prices leads to an expansion in the money supply, which stimulates additional output.
d. An increase in prices increases real wage rates and thereby expands the size of the economy's resource base.
A
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