An increase in the aggregate price level will increase:
A) short-run aggregate supply.
B) the quantity of aggregate output supplied in the short run.
C) aggregate demand.
D) the quantity of aggregate output demanded.

Question

Quizplus · Accepted Answer

An increase in the aggregate price level leads to an increase in the quantity of aggregate output supplied in the short run because producers are willing to supply more goods and services when prices are higher, assuming other factors remain constant. This is represented by a movement along the short-run aggregate supply curve, not a shift of the curve itself or changes in aggregate demand.

An Increase in the Aggregate Price Level Will Increase