Which of the following shifts short-run,but not long-run aggregate supply right?
A)a decrease in the actual price level
B)a decrease in the expected price level
C)a decrease in the capital stock
D)an increase in the money supply

Question

Quizplus · Accepted Answer

A decrease in the expected price level causes firms to decrease their production costs because they anticipate a decrease in input prices, which results in a rightward shift of the short-run aggregate supply curve. However, in the long run, input prices and wages will fully adjust to the lower level of prices and the aggregate supply curve will shift back to its original position; thus, it does not affect long-run aggregate supply. The other choices do not shift short-run aggregate supply to the right. A decrease in the actual price level reduces the quantity of goods and services that firms are willing to supply in the short run, lowering the short-run aggregate supply. A decrease in the capital stock reduces the productive capacity of an economy, shifting the short- and long-run aggregate supply curves to the left. An increase in the money supply leads to an increase in aggregate demand and shifts both short- and long-run aggregate supply curves to the right.

Which of the Following Shifts Short-Run,but Not Long-Run Aggregate Supply