The short-run aggregate supply curve
A) is vertical.
B) shows the impact changes in the price level have on the quantity of real GDP when resource prices are constant.
C) illustrates the level of potential real GDP.
D) shifts whenever the price level changes.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve (SRAS) shows the relationship between the price level and the quantity of goods and services that firms are willing to produce, assuming that the prices of inputs or resources (like wages) are constant. It slopes upward because, in the short run, an increase in the price level while input prices remain fixed can make production more profitable, leading firms to increase the quantity of output.

The Short-Run Aggregate Supply Curve