An aggregate supply curve
A) becomes horizontal at full employment.
B) slopes downward and to the right during periods of unemployment.
C) can be derived by adding up the supply curves for all individual commodities.
D) is constructed on the assumptions that the money supply is fixed and there is full employment of resources.
E) is constructed by allowing all commodity prices to vary.

Question

Quizplus · Accepted Answer

An aggregate supply curve is constructed by allowing all commodity prices (not just one individual commodity) to vary, which means that it will not become horizontal at full employment or assume fixed money supply. It slopes upward and to the right during periods of unemployment, indicating that producers are willing to supply more at higher prices.

An Aggregate Supply Curve