The short-run 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

Question

The short-run 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

Quizplus · Accepted Answer

The short-run aggregate supply curve shows the relationship between price level and the quantity of real GDP supplied, holding all other factors constant. This means that changes in factors such as input prices, technology, and expectations are assumed to remain constant in the short run. The curve slopes upward because at higher price levels, producers are incentivized to increase their output in order to profit from the higher prices.

The Short-Run Aggregate Supply Curve Shows the Relationship Between ____