An introduction to the AD-AS model:

The aggregate demand and aggregate supply model is a useful simplification of the macroeconomy used to explain short-run fluctuations in economic activity around its long-run trend.

The horizontal axis of a diagram of the aggregate demand and aggregate supply curves measures which of the following?

An economy's real GDP

An economy's price level

The price of a particular representative good produced in the economy

The amount of a particular representative good produced in the economy

Which of the following are reasons that the short-run aggregate supply curve slopes upward? Check all that apply.

As the price level rises, firms pay higher wages for workers.

As the price level rises, firms expand their production because they can sell their output for more money.

As the price level rises, firms find it more profitable to hire workers at any given wage.