The short-run aggregate supply curve___________
A) illustrates the level of potential real GDP.
B) shows the impact changes in the price level have on the quantity of real GDP when resource prices are constant.
C) is vertical.
D) shifts whenever the price level changes.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve shows the relationship between the price level and the quantity of real GDP produced in the short run, assuming that resource prices are constant. Therefore, changes in the price level have an impact on the quantity of real GDP produced in the short run. The short-run aggregate supply curve is not vertical because it is assumed that some resources are fixed in the short run. The level of potential real GDP is illustrated by the long-run aggregate supply curve.

The Short-Run Aggregate Supply Curve___________