The relationship between the price level and the real Gross Domestic Product (GDP) without full adjustment or full information is represented by
A) the long-run aggregate supply curve.
B) the short-run aggregate supply curve.
C) the aggregate demand curve.
D) the distance between the long-run aggregate supply curve and the short-run aggregate supply curve.

Question

Quizplus · Accepted Answer

The relationship between the price level and the real GDP without full adjustment or full information is represented by the short-run aggregate supply curve. The short-run aggregate supply curve shows the relationship between the price level and the quantity of output that firms are willing to supply in the short run, taking into account production costs, including adjustments to inputs such as wages and raw material prices, but not taking into account changes in capital or technology.

The Relationship Between the Price Level and the Real Gross