Along the aggregate supply curve
A)the horizontal part represents a situation where the economy is operating above full employment levels.
B)inflation would be a primary concern along the horizontal part of the aggregate supply curve.
C)the horizontal section of the aggregate supply curve represents the limit of production.
D)the middle, upward-sloping part of the aggregate supply curve would be associated with a growing economy that experienced increased prices from resources that are becoming relatively scarce.

Question

Quizplus · Accepted Answer

The middle, upward-sloping part of the aggregate supply curve is associated with a growing economy that is experiencing increased prices due to resources becoming relatively scarce. This section of the curve is often referred to as the "cost-push inflation" section, where an increase in production costs causes a rise in prices. The horizontal part of the curve, on the other hand, represents a situation where the economy is operating above full employment levels, which could lead to rising inflation as companies compete for limited resources. The limit of production is represented by the vertical section of the curve, where an increase in demand for goods and services cannot be met by a corresponding increase in supply.

Along the Aggregate Supply Curve