An increase in the price level will
A)shift the short-run aggregate supply curve to the left.
B)shift the short-run aggregate supply curve to the right.
C)move the economy up along a stationary short-run aggregate supply curve.
D)move the economy down along a stationary short-run aggregate supply curve.

Question

Quizplus · Accepted Answer

An increase in the price level leads to a decrease in the real value of money, which leads to an increase in the demand for goods and services, leading to an increase in the quantity of goods and services supplied in the economy. This, in turn, moves the economy up along a stationary short-run aggregate supply curve.

An Increase in the Price Level Will