Which of the following statements about the aggregate supply curve is most accurate?
A)It is typically flat for levels of output lower than the full-employment level.
B)It is a schedule showing the relationship between the price level and the quantity of nominal GDP supplied.
C)It is derived from product prices.
D)It is typically upward sloping.

Question

Quizplus · Accepted Answer

The most accurate statement about the aggregate supply curve is that it is typically upward sloping. This means that as the price level increases, firms are willing to produce more output, as they can earn higher profits. The curve is not typically flat at lower levels of output, as suggested in option A, and it is not derived solely from product prices, as suggested in option C. Option B is partially correct, as the aggregate supply curve does show the relationship between the price level and the quantity of nominal GDP supplied, but it also takes into account other factors such as input prices, technology, and the state of the labor market.

Which of the Following Statements About the Aggregate Supply Curve