When the price level falls from 135 to 120, the aggregate level of GDP supplied falls from $140 billion to $125 billion.This ________ relationship represents the ________ relationship between GDP and the price level.
A)negative; short-run
B)positive; short-run
C)negative; long-run
D)positive; long-run
E)negative; medium-run

Question

Quizplus · Accepted Answer

The described scenario illustrates a positive relationship between the price level and the aggregate level of GDP supplied in the short run, indicating that as the price level falls, the GDP supplied also falls, and vice versa. This is characteristic of the short-run aggregate supply curve.

When the Price Level Falls from 135 to 120, the Aggregate