Which curve shows a positive relationship between the price level and the amount of output that producers are willing and able to sell?

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BlackTom AI · Accepted Answer

Let's examine what the question is asking: which curve shows a positive relationship between the price level and the amount of output that producers are willing and able to sell?
Option 1: the short-run aggregate supply curve. This curve is characterized by rising price levels being associated with higher quantity of goods and services supplied in the short run, due to wage and price rigidities that let output respond to price changes.
Option 2: the long-run aggregate supply curve. In the long run, the economy’s output is determined by resources, technology, and institutions, and the curve is typically vertical, meaning price level changes do not systematically change the quantity of output in the long run.
Option 3: the aggregate expenditure curve. This concept relates to spending plans and the equilibrium in a Keynesian framework, often depicted in a 45-degree line context, and does not describe a direct positive relationship between price level and producer output.
Option 4: the aggregate demand curve. This curve is downward sloping, reflecting that higher price levels lead to lower total demand, not higher output supplied by producers, so it does not show a positive relationship between price and supply.
In summary, among the choices, the one that aligns with a direct positive link between the price level and the quantity producers are willing and able to supply in the short run is associated with the curve described in Option 1, while the others describe different relationships or contexts altogether.

ECON 2002.01 AU2025 (21333) Midterm Exam 3 - Requires Respondus LockDown Browser

Which curve shows a positive relationship between the price level and the amount of output that producers are willing and able to sell?

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