The aggregate supply curve of an economy:
A)is a downward-sloping straight line.
B)is an upward-sloping curve.
C)is a vertical line parallel to the price axis.
D)is a horizontal line parallel to the output axis.
E)is a ray from the origin.

Question

Quizplus · Accepted Answer

The aggregate supply curve of an economy is generally upward-sloping because as the price level increases, firms are willing to produce and supply more output in order to earn higher profits. However, in the short run, the curve may be relatively flat or even downward-sloping due to factors such as sticky prices or limited capacity. In the long run, the aggregate supply curve tends to be vertical due to the assumption of full employment and potential output determined by factors such as technology and resources.

The Aggregate Supply Curve of an Economy