If the money prices of resources changes,
A) the SAS curve shifts.
B) the AD curve shifts.
C) the macroeconomic equilibrium is unaffected.
D) the LAS curve shifts.

Question

Quizplus · Accepted Answer

If the money prices of resources change, it will affect the production costs of firms and their incentives to supply goods and services. This will lead to a shift in the SAS curve, as it represents the short-run relationship between the price level and output. The AD curve represents the aggregate demand in the economy, which is not directly affected by changes in resource prices. The macroeconomic equilibrium will be affected, as it depends on the intersection of the AD and SAS curves, but it will not remain unchanged. The LAS curve represents the potential output of the economy, which is determined by factors like technology, labor force, and capital stock, and is not affected by changes in resource prices.

If the Money Prices of Resources Changes