Question

12. The equation: quantity of output supplied = natural rate of output + a(actual price level - expected price level), where a is a positive number, represents a. an upward-sloping short-run aggregate supply curve b. a vertical short-run aggregate supply curve c. a downward-sloping aggregate demand curve d. None of the above is correct.

Answer 1

Answer:a. an upward-sloping short-run aggregate supply curve

Explanation:

variable a represent an upward sloping short run aggregate supply curve.

The slope of the supply curve is positive which tells us that the quantity supplied has a positive relationship with Price.When price increases the quantity supplied will increase because the law of supply states that more quantity is supplied at a higher price