The short-run aggregate supply curve indicates
A)the relationship between the price level and real GDP demanded by consumers, investors, governments, and net exporters.
B)the relationship between the price level and the natural unemployment rate.
C)the relationship between the purchasing power of wages and the quantity of labour supplied by households.
D)the relationship between the quantity of real GDP supplied and the price level when the money wage rate, the prices of other resources, and potential GDP remain constant.
E)the various quantities of real GDP producers supply at different income levels.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve indicates the relationship between the quantity of real GDP supplied and the price level when the money wage rate, the prices of other resources, and potential GDP remain constant. In other words, it shows how much output firms are willing and able to produce at different price levels in the short run. The curve is upward sloping, implying that as prices increase, firms are willing to produce more output, at least in the short run, given that their costs remain constant.

The Short-Run Aggregate Supply Curve Indicates