The aggregate supply curve illustrates that the
A)higher the price level,the greater the quantity of real GDP supplied.
B)higher the price level,the smaller the quantity of real GDP supplied.
C)aggregate demand curve is not needed to determine the aggregate price level.
D)price level does not affect the quantity of real GDP supplied.
E)amount of potential GDP increases when the price level rises.

Question

Quizplus · Accepted Answer

According to the aggregate supply curve, as the price level increases, the quantity of real GDP supplied also increases. This is because higher prices provide an incentive for businesses to increase their level of production in order to maximize profits. Therefore, choice A is the correct answer.

The Aggregate Supply Curve Illustrates That the