Question

A decrease in short-run aggregate supply means ________.

Question 14 options:

	A) the real GDP would decrease and the price level would rise
	B) both the real GDP and rises in the price level would become greater
	C) both the real GDP and the price level would decrease
	D) the real GDP would increase and rises in the price level would become smaller

If aggregate demand increases and aggregate supply decreases, the price level ________.

Question 22 options:

	A) will increase, but real output may increase, decrease, or remain unchanged
	B) will decrease, but real output may increase, decrease, or remain unchanged
	C) and real output will both increase
	D) and real output will both decrease

The short-run aggregate supply curve is most likely to shift to the right if ________.

Question 23 options:

	A) sales taxes increase
	B) input prices decrease
	C) wages increase
	D) productivity decreases

Answer 1

Question 14:

A decrease in short-run aggregate supply means leftward shift of the aggregate supply curve.

Hence, given the aggregate demand curve, real GDP would decrease and the price level would rise

Thus, the correct answer is A) the real GDP would decrease and the price level would rise

Question 22:

When aggregate demand increases (rightward shift of the aggregate demand curve) and the aggregate supply decreases (leftward shift of the aggregate supply curve), the price level will increase, but the real output may increase, decrease, or remain unchanged

Hence, the correct answer is A) will increase, but real output may increase, decrease, or remain unchanged

Question 23:

It shall be noted that the increase of sales tax, wage increase, and productivity decrease acts as a drag on the aggregate supply curve. Hence, they will cause a leftward shift of the aggregate supply curve.

Hence, the correct answer is B) input prices decrease