The aggregate supply curve is drawn with
A)the price level on the vertical axis and nominal GDP on the horizontal.
B)nominal GDP on the vertical axis and real GDP on the horizontal.
C)the price level on the vertical axis and real GDP on the horizontal.
D)real GDP on the horizontal axis and the rate of inflation on the vertical.

Question

Quizplus · Accepted Answer

The aggregate supply curve shows the total amount of goods and services that firms are willing and able to produce at different price levels. Therefore, the price level should be on the vertical axis, while the horizontal axis measures real GDP, which is the total output produced by an economy after adjusting for inflation. Therefore, the correct choice is C.

The Aggregate Supply Curve Is Drawn with