What relationship does aggregate supply describe?
A) the relationship between price level and real GDP
B) the relationship between nominal GDP and real GDP
C) the relationship between real GDP and the level of production
D) the relationship between nominal GDP and the level of output

Question

What relationship does aggregate supply describe?  
A) the relationship between price level and real GDP 
B) the relationship between nominal GDP and real GDP 
C) the relationship between real GDP and the level of production 
D) the relationship between nominal GDP and the level of output

Quizplus · Accepted Answer

Aggregate supply describes the relationship between the price level and real GDP. It shows how much output producers are willing to supply at different price levels. As the price level increases, producers are willing to supply more goods and services, leading to a higher level of real GDP. Conversely, as the price level decreases, producers are willing to supply less, leading to a lower level of real GDP.

What Relationship Does Aggregate Supply Describe