A leftward shift in the aggregate supply curve
A) increases both the price level and real GDP.
B) occurs when consumer expenditures exceed available output.
C) occurs when the price of a key resource rises.
D) occurs when the Fed increases the quantity of money.

Question

Quizplus · Accepted Answer

A leftward shift in the aggregate supply curve occurs when the price of a key resource rises, which leads to higher production costs and therefore less output being produced at any given price level. This results in an increase in the price level but a decrease in real GDP.

A Leftward Shift in the Aggregate Supply Curve