Use the following to answer question 108:
Figure: Aggregate Supply Movements
-(Figure: Aggregate Supply Movements) Refer to Figure: Aggregate Supply Movements. Which statement is correct?
A) An increase in the price level is responsible for pushing the curve to the right.
B) A decrease in the price level is responsible for pushing the short-run aggregate supply curve to the right.
C) Short-run aggregate supply has increased.
D) Short-run aggregate supply has decreased.

Question

Use the following to answer question 108:
Figure: Aggregate Supply Movements 
-(Figure: Aggregate Supply Movements) Refer to Figure: Aggregate Supply Movements. Which statement is correct?
A) An increase in the price level is responsible for pushing the curve to the right. 
B) A decrease in the price level is responsible for pushing the short-run aggregate supply curve to the right. 
C) Short-run aggregate supply has increased. 
D) Short-run aggregate supply has decreased.

Quizplus · Accepted Answer

The figure shows a movement of the short-run aggregate supply curve from SRAS1 to SRAS2. This indicates an increase in short-run aggregate supply, which could be caused by factors such as a decrease in input prices, improvements in technology, or an increase in the size of the labor force. The movement of the curve is not caused by changes in the price level, as indicated by the position of the AD curve remaining constant. Therefore, options A and B are incorrect. Option D is also incorrect because it suggests a movement of the short-run aggregate supply curve to the left, which is not consistent with the information presented in the figure.

Use the Following to Answer Question 108