Which of the following would make the price level increase and real GDP decrease?

a. aggregate demand shifts right.

b. long-run aggregate supply shifts right

c. aggregate demand shifts left

d. long-run aggregate supply shifts left

Expert Solution

Ans. d. long - run aggregate supply shifts left

When long - run aggregate supply curve shifts left, given the aggregate demand curve, the price level increases and the real GDP decreases.

Note: the reason of the leftward shifts of aggregate supply curve

1) decrease in workforce ( number of labors )

2) increase in the natural rate of unemployment

Rahul Sunny answered 2 years ago

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