Which equation is a plausible aggregate supply curve?
A)Y = 50 - 1.25π
B)π = 2 + 0.3 (Y - 75)
C)Y = 250 - 80r
D)π = 5 - 0.4 (U - 6)
E)none of the above

Question

Quizplus · Accepted Answer

This equation represents a typical upward sloping aggregate supply curve, where increasing output leads to higher prices due to increasing input costs and resource scarcity. As output increases, firms need to pay higher wages and invest in more expensive capital, thus leading to higher prices. The equation also shows a positive relationship between output and price level, with a positive slope (0.3) indicating that a 1% increase in output leads to a 0.3% increase in prices.

Which Equation Is a Plausible Aggregate Supply Curve