Which of the following is true of the aggregate supply curve?
A)It shows the inverse relationship between prices and national output.
B)It shows the positive relationship between the price level and the supply of all goods produced in the economy.
C)It shows the amount of real GDP consumed at different price levels.
D)It is a negatively sloped curve that shows the relationship between the price level and the cost of production of firms in the economy.
E)It shows the positive relationship between price and quantity supplied of an individual good.

Question

Quizplus · Accepted Answer

The aggregate supply curve shows the positive relationship between the price level and the supply of all goods produced in the economy. This means that as the price level for goods and services increases, firms are willing to supply more output. The curve is not negatively sloped, as stated in option D, which refers to the individual firm's supply curve. Option A is incorrect because it explains the concept of the aggregate demand curve, which shows the inverse relationship between prices and national output. Option C is also incorrect because it refers to the level of real GDP consumed, which is not shown on the aggregate supply curve. Finally, option E is incorrect because it refers to an individual good's supply curve, not the aggregate supply curve.

Which of the Following Is True of the Aggregate Supply