The aggregate supply curve:
A)shows the level of nominal GDP that firms are willing to produce at different price levels.
B)shows the level of real GDP that firms are willing to consume at different price levels.
C)shows the level of real GDP that firms are willing to produce at different price levels.
D)shows the amount of goods and services consumers are willing to buy at different price levels.

Question

Quizplus · Accepted Answer

The aggregate supply curve shows the level of real GDP that firms are willing to produce at different price levels. It represents the relationship between the total quantity of goods and services supplied by all firms in an economy and the overall price level. As prices increase, firms have an incentive to produce more since they can earn higher profits, which leads to an increase in the aggregate supply of goods and services. As prices decrease, firms have less incentive to produce, and the aggregate supply decreases.

The Aggregate Supply Curve