If output was above the natural rate and the central bank raised interest rates to shift AD left so output fell back to the natural rate, the AS curve would respond by
A) shifting to the right.
B) shifting to the left.
C) not shifting at all.
D) rotating right

Question

Quizplus · Accepted Answer

The AS (Aggregate Supply) curve would not shift in response to a change in the interest rate aimed at adjusting aggregate demand (AD) to bring output back to the natural rate. The AS curve represents the total supply of goods and services that firms in an economy are willing to sell at a given price level, and it is not directly affected by monetary policy actions aimed at controlling aggregate demand.

If Output Was Above the Natural Rate and the Central