Resource prices will fall and short-run aggregate supply will increase if
A) current output exceeds the economy's full-employment level.
B) current output is less than the economy's full-employment level.
C) the actual rate of unemployment is less than the natural rate of unemployment.
D) exports exceed imports.

Question

Quizplus · Accepted Answer

When current output is less than the economy's full-employment level, there is less demand for resources, leading to a decrease in resource prices and an increase in short-run aggregate supply.

Resource Prices Will Fall and Short-Run Aggregate Supply Will Increase