The aggregate supply curve
A)shows what each producer is willing and able to produce at each income level.
B)relates planned aggregate production to price level.
C)becomes vertical if there is excess production capacity within the economy.
D)shows a negative relationship between the price level and real Gross Domestic Product (GDP).

Question

Quizplus · Accepted Answer

The aggregate supply curve relates planned aggregate production to the price level. As the price level rises, producers are willing to supply more output, leading to an increase in aggregate supply. Conversely, as the price level falls, producers are willing to supply less output, resulting in a decrease in aggregate supply. The other options are incorrect: A is describing the micro-level supply curve, C is describing the situation when the economy is operating at full capacity, and D is describing the slope of the aggregate demand curve, not the aggregate supply curve.

The Aggregate Supply Curve