The short-run aggregate supply curve
A) shows what each producer is willing and able to produce at each level of income holding constant potential GDP and all resource prices.
B) shows the relationship between aggregate production and the price level holding constant potential GDP and all resource prices.
C) becomes vertical if there is excess production capacity within the economy.
D) shows a negative relationship between the price level and real national income holding constant potential GDP and all resource prices.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve (SRAS) illustrates the relationship between the total production of goods and services (aggregate production) and the price level, while keeping potential GDP and all resource prices constant. It reflects how much producers are willing and able to supply at different price levels in the short run, where some costs can be variable.

The Short-Run Aggregate Supply Curve