Consider the basic AD/AS model. In the short run, a shift of the aggregate supply curve would lead to a change in real GDP by mostly changing
A)the level of investment.
B)the prices of factors of production.
C)the productivity of capital.
D)the amount of labour employed.
E)the amount of land (natural resources)available to the economy.

Question

Quizplus · Accepted Answer

In the short run, a shift in the aggregate supply curve would mostly change the amount of labour employed as firms adjust their production levels to meet changes in input costs or availability. A shift in aggregate supply could be caused by changes in the prices of factors of production or productivity, but it is the resulting change in the amount of labour employed that leads to changes in real GDP.

Consider the Basic AD/AS Model