The portion of the aggregate supply curve that is a positive function of the general price level represents excess capacity and unemployed resources.

Question

Quizplus · Accepted Answer

The portion of the aggregate supply curve that is a positive function of the general price level represents the short-run aggregate supply (SRAS) curve, which shows the level of output that firms are willing to supply at different price levels in the short run. This portion of the curve does not necessarily represent excess capacity and unemployed resources as it can also reflect firms' ability to increase production by utilizing existing resources and labor in response to higher prices.

The Portion of the Aggregate Supply Curve That Is a Positive