The aggregate supply curve shows the relationship between ____ and ____, holding all other factors constant.
A)a price level, the quantity of real GDP supplied
B)price level, the supply of real GDP
C)nominal GDP, the price level of real GDP
D)the quantity of nominal GDP supplied, the price level
E)output, input

Question

Quizplus · Accepted Answer

The aggregate supply curve shows the relationship between the price level and the quantity of real GDP supplied in an economy, holding all other factors constant. As the price level increases (assuming other factors are constant), firms will produce more output because they can earn higher profits by selling their goods and services at higher prices. However, as the economy approaches full employment, the production capacity of the economy may be limited, causing the aggregate supply curve to become more vertical.

The Aggregate Supply Curve Shows the Relationship Between ____ and ____

The Aggregate Supply Curve Shows the Relationship Between and