What is measured on the vertical axis of the aggregate supply curve?
A)real output
B)the overall price level as captured by a price index
C)a goods relative price
D)the quantity per time period of a particular good

Question

Quizplus · Accepted Answer

The vertical axis of the aggregate supply curve measures the overall price level as captured by a price index. This is because aggregate supply represents the total amount of goods and services that firms are willing and able to produce at a given price level. As the price level increases, firms are incentivized to produce more output to earn greater profits, leading to a greater quantity supplied. Conversely, as the price level decreases, firms may reduce production due to lower profitability, leading to a lower quantity supplied. Thus, the overall price level is a critical factor in determining the aggregate supply of the economy.

What Is Measured on the Vertical Axis of the Aggregate