The short-run aggregate supply curve
A) shows a negative relationship between the price level and real national income holding constant potential GDP and all resource prices.
B) shows what each producer is willing and able to produce at each level of income holding constant potential GDP and all resource prices.
C) shows the relationship between aggregate production and the price level holding constant potential GDP and all resource prices.
D) becomes vertical if there is excess production capacity within the economy.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve shows the relationship between aggregate production and the price level holding constant potential GDP and all resource prices. It does not show the willingness or ability of individual producers or become vertical due to excess production capacity. Option A and B are incorrect as they do not fully explain the concept of short-run aggregate supply.

The Short-Run Aggregate Supply Curve