A decrease in input prices will cause
A)AD to increase (move to the right).
B)AD to decrease (move to the left).
C)AS to increase (move to down and to the right).
D)AS to decrease (move to up and to the left).

Question

Quizplus · Accepted Answer

A decrease in input prices will lower the cost of producing goods and services, leading to an increase in the quantity supplied for any given price level. This will cause AS (Aggregate Supply) to increase and shift down and to the right, allowing a larger quantity to be produced and supplied at every given price level. It will not affect AD (Aggregate Demand).

A Decrease in Input Prices Will Cause