Which statement characterizes a short-run aggregate supply curve?
A) The short-run aggregate supply curve portrays an inverse relationship between the price level and quantity of aggregate output.
B) Resource utilization is constant along the short-run aggregate supply curve.
C) A movement along a short-run aggregate supply curve that is reflected in a decrease in the price level encourages firms to expand production.
D) A movement along a short-run aggregate supply curve that is reflected in an increase in the price level encourages firms to expand production.

Question

Which statement characterizes a short-run aggregate supply curve?  
A) The short-run aggregate supply curve portrays an inverse relationship between the price level and quantity of aggregate output. 
B) Resource utilization is constant along the short-run aggregate supply curve. 
C) A movement along a short-run aggregate supply curve that is reflected in a decrease in the price level encourages firms to expand production. 
D) A movement along a short-run aggregate supply curve that is reflected in an increase in the price level encourages firms to expand production.

Quizplus · Accepted Answer

The short-run aggregate supply curve portrays a positive relationship between the price level and the quantity of aggregate output. Therefore, a movement along a short-run aggregate supply curve that results in an increase in the price level encourages firms to expand production.

Which Statement Characterizes a Short-Run Aggregate Supply Curve