The aggregate supply (AS)curve is drawn with which variables on the axes of the graph?
A)the price level on the vertical axis and MPC on the horizontal axis
B)national income on the vertical axis and marginal cost on the horizontal axis
C)the price level on the vertical axis and real national income on the horizontal axis
D)the price level on the vertical axis and real disposable income on the horizontal axis
E)national income on the vertical axis and total desired consumption on the horizontal axis

Question

Quizplus · Accepted Answer

The aggregate supply (AS) curve is drawn with the price level on the vertical axis and real national income on the horizontal axis. This is because the AS curve represents the relationship between the price level and the quantity of real GDP that businesses are willing to supply. As the price level increases, firms will be more willing to produce and supply goods and services, which will lead to an increase in real national income. Therefore, the price level is plotted on the vertical axis and real national income is plotted on the horizontal axis.

The Aggregate Supply (AS)curve Is Drawn with Which Variables on the Axes