The economy's aggregate supply (AS)curve shows the relationship between the price level and the total
A)wealth accumulated by households, with national income given.
B)investment that firms wish to make, as input prices vary.
C)output that firms wish to produce and sell, as input prices vary.
D)output that firms wish to produce and sell, with input prices given.
E)investment that firms wish to make, with input prices given.

Question

Quizplus · Accepted Answer

The AS curve shows the relationship between the price level and the output (or production) that firms in the economy are willing and able to produce and sell. It takes into account the input prices, but the focus is on the level of output, not the level of investment. Therefore, Choice D is the best answer.

The Economy's Aggregate Supply (AS)curve Shows the Relationship Between the Price