Final answer:
The shape of the aggregate supply curve is determined by the economy's capacity to produce goods and services, not by aggregate demand as real output expands, making the statement false.
Step-by-step explanation:
The claim that the shape of the aggregate supply curve is determined by what happens to aggregate demand as real output expands is false. The aggregate supply (AS) curve reflects how much output the economy can produce at different price levels, not the aggregate demand. The AS curve's slope is relatively flat at lower levels of output, indicating that demand increases can lead to large increases in output with little change in price levels. However, as the level of output increases towards the economy's capacity, represented by potential GDP or full-employment GDP, the AS curve becomes steeper and eventually nearly vertical. At this point, demand increases will not increase output further due to input limitations such as labor and machinery being fully employed.