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31 October, 09:01

An increase in the price level will

A. move the economy up along a stationary short run aggregate supply curve.

B. move the economy down along a stationary short run aggregate supply curve.

C. shift the short run aggregate supply curve to the right.

D. shift the short run aggregate supply curve to the left.

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Answers (2)
  1. 31 October, 10:29
    0
    Answer: The correct option is C. shift the short run aggregate supply curve to the right.

    Explanation: A country's aggregate supply is a reflection or representation of the real Gross domestic product (GDP), and this refers to the total amount of products in which all the suppliers in the economy are able to sell at a given price level.

    Therefore, as the price level changes significantly, this will affect the the aggregate Supply in a proportionate manner. In this case, as the price level increases, suppliers will be more inclined to supply more and there will be an increase in supply.

    This increase in supply will cause a rightward shift in the short run aggregate supply curve.
  2. 31 October, 10:55
    0
    A. move the economy up along a stationary short run aggregate supply curve.

    Explanation: The aggregate supply curve is a graphical representation of the real Gross domestic product or the products which the economy is able to sell at a given price level. As the price level changes significantly so also does the aggregate Supply changes and when represented in the graph it will show either an upward or downward movement.
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