Which of the following would cause the aggregate price level to fall and the equilibrium level...

Which of the following would cause the aggregate price level to fall and the equilibrium level of real GDP to increase in the short run?

Question 9 options:

a)	the short-run aggregate supply curve shifts left

b)	aggregate demand shifts left

c)	the short-run aggregate supply curve shifts right

d)	aggregate demand shifts right

Expert Solution

The correct answer is 'Option C'.

When the short-run aggregate supply increases then the short-run aggregate supply curve shifts to the right as a result of which there is excess supply in the economy because of which the price level will fall and the real GDP will increase because of increased supply. Therefore, the correct answer is 'Option C'.

Rahul Sunny answered 2 years ago

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