Asked by Yussef Farag on Jul 18, 2024
Verified
Which of these is a likely impact of an increase in the price level in an economy on the aggregate supply in the economy?
A) An increase in the quantity of real GDP supplied
B) A decrease in the quantity of real GDP supplied
C) A leftward shift of the aggregate supply curve
D) A rightward shift of the aggregate supply curve
E) An increase in the slope of the aggregate supply curve
Aggregate Supply
The total supply of goods and services that firms in an economy plan on selling during a specific time period at given prices.
Price Level
A measure of the average prices of goods and services in an economy at a given time.
Real GDP
Gross Domestic Product adjusted for inflation, measuring the value of all goods and services produced over a specific time frame.
- Analyze the effects of changes in price levels on aggregate demand and aggregate supply.
Verified Answer
AC
ashley carterJul 20, 2024
Final Answer :
A
Explanation :
An increase in the price level in an economy typically leads to an increase in the quantity of real GDP supplied, as higher prices can make production more profitable, encouraging firms to increase output. This is represented by a movement along the aggregate supply curve, not a shift of the curve itself.
Learning Objectives
- Analyze the effects of changes in price levels on aggregate demand and aggregate supply.