Which of the following statements about the AS curve is true?
A)Real wages are constant along an AS curve.
B)The curve becomes steeper as it approaches Potential GDP.
C)The AS curve will shift when the price level increases.
D)It is usually a straight line.
E)It is a function of aggregate demand.

Question

Quizplus · Accepted Answer

As output approaches potential GDP, the AS curve becomes steeper due to diminishing returns to inputs. Option A is incorrect because the real wage rate can change along the AS curve. Option C is incorrect because a change in the price level will cause movement along the AS curve, not a shift. Option D is incorrect because the AS curve is typically upward sloping, but not necessarily a straight line. Option E is incorrect because the AS curve reflects the relationship between the price level and output, independent of aggregate demand.

Which of the Following Statements About the AS Curve Is