Aggregate supply describes a relationship between
A) spending and income.
B) output and prices.
C) costs and revenue.
D) spending and output.
E) spending and prices.

Question

Quizplus · Accepted Answer

Aggregate supply refers to the total amount of goods and services produced by an economy over a given period of time. It describes the relationship between the level of output (supply) and the general price level. As output increases, firms may face higher costs for factors of production, which may result in higher prices for goods and services they produce. Therefore, the supply relationship between output and prices is known as the aggregate supply curve.

Aggregate Supply Describes a Relationship Between