Question 1

What is aggregate supply?

Accepted Answer

The amount of goods and services (real GDP) that firms will produce in an economy at different price levels

(the supply for everything by all firms)

Question 2

What does the short-run aggregate supply curve describe?

Accepted Answer

The relationship between the price level and the quantity of goods and services supplied in an economy

Question 3

Why is the SRAS curve upward sloping?

Accepted Answer

Wages/prices are sticky in the short run, so an increasing price level means that resources are easier to obtain

Question 4

Why is there a short-run tradeoff between inflation and unemployment?

Accepted Answer

Increased price level (inflation) increases output, meaning that employment must rise to match that output

Because employment rises, unemployment falls

3.3 Short-Run Aggregate Supply, AP Macroeconomics Flashcards