Identify the correct statement about the aggregate supply curve.
A)The aggregate supply curve is irrelevant for determining macroeconomic equilibrium.
B)The aggregate supply curve shows the various quantities of a particular good that is produced in the economy.
C)The aggregate supply curve shows an inverse relationship between price level and employment.
D)The aggregate supply curve shifts inward with an increase in consumer spending, investment, government spending, and net exports.
E)The aggregate supply curve relates total output in the economy to alternative price levels.

Question

Quizplus · Accepted Answer

The aggregate supply curve shows the relationship between the total output produced in the economy and the different price levels at which it is sold. An increase in production costs, such as an increase in labor or material costs, will shift the aggregate supply curve inward, while a decrease in costs will shift it outward. Changes in consumer spending, investment, government spending, and net exports affect aggregate demand, not aggregate supply.

Identify the Correct Statement About the Aggregate Supply Curve