If there are floods or droughts or a decrease in the availability of raw materials
A)aggregate supply shifts right.
B)output falls in the short run.
C)prices fall in the short run.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

Floods or droughts can damage crops or affect irrigation, leading to a decrease in output in the short run. A decrease in the availability of raw materials can also decrease output in the short run, as firms may not have access to the necessary inputs to produce goods. Aggregate supply shifting right would indicate an increase in the availability of resources, which is not the case in these scenarios. Prices may also increase in the short run due to the decrease in supply, so choice C is not correct.

If There Are Floods or Droughts or a Decrease in the Availability