Which of the following is true of the short-run aggregate supply curve?
A)It shows the relation between the inflation rate and the quantity of aggregate output firms supply,other things constant.
B)It shows the relation between the price of labor and the aggregate quantity of labor workers supply,other things constant.
C)It shows the relation between the interest rate and the quantity of capital goods firms supply,other things constant.
D)It shows the relation between the price level and the quantity of aggregate output firms supply,other things constant.
E)It displays an inverse relationship between the price level and real GDP.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve shows the relation between the price level and the quantity of aggregate output firms supply, other things constant. This means that the curve illustrates the direct relationship between the price level and the quantity of goods and services that firms are willing and able to produce and sell in the short run, holding constant the prices of inputs like labor and capital, among other things. A higher price level leads to a greater quantity of aggregate output supplied by firms, while a lower price level leads to a lower quantity of aggregate output supplied, all else equal.

Which of the Following Is True of the Short-Run Aggregate