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== Analysis ==
There are two main reasons why the amount of aggregate output supplied might rise as price level ''P'' rises, i.e., why the ''AS'' curve is upward sloping:
* The short run ''AS'' curve is drawn given some nominal variables such as the nominal wage rate, which is assumed fixed in the ''short run''. Thus, a higher price level ''P'' implies a lower real wage rate and thus an incentive to produce more output. In the [[neoclassical economics|neoclassical]] ''long run'', on the other hand, the nominal wage rate varies with economic conditions. (High unemployment leads to falling nominal wages which restore full employment.) Hence in the long run the aggregate supply curve is vertical.
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