The aggregate supply curve
A) becomes vertical if there is excess production capacity within the economy.
B) shows a negative relationship between the price level and real Gross Domestic Product (GDP).
C) shows what each producer is willing and able to produce at each income level.
D) relates planned aggregate production to price level.
D
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The short-run aggregate supply curve shows the relationship between ____ and ____, holding all other factors constant
a. a price level, the quantity of real GDP supplied b. price level, the supply of real GDP c. nominal GDP, the price level of real GDP d. the quantity of nominal GDP supplied, the price level
For a small country with a closed economy, if the marginal propensity to save is equal to 0.2, then the spending multiplier indicates that a $10 exogenous increase in government spending will lead to a $20 increase in gross domestic product (GDP).
Answer the following statement true (T) or false (F)