Question

What does a short run aggregate supply curve show?

1) The relationship between the price level and the quantity of real GDP supplied in the short run
2) The relationship between the price level and the quantity of real GDP demanded in the short run
3) The relationship between the price level and the quantity of money supplied in the short run
4) The relationship between the price level and the quantity of money demanded in the short run

Answer 1

The short run aggregate supply curve shows the positive relationship between the price level and the level of real GDP in the short run.

Step-by-step explanation:

The short run aggregate supply (SRAS) curve shows the positive relationship between the price level and the level of real GDP in the short run. This means that as the price level increases, the quantity of real GDP supplied also increases. The SRAS curve slopes up because when the price level for outputs increases, it incentivizes firms to produce more and increase their profits.