If the costs of production decrease,there is
A)an increase in the quantity of real GDP supplied and a movement up along the AS curve.
B)an increase in aggregate supply and the AS curve shifts rightward.
C)a decrease in the quantity of real GDP supplied and a movement down along the AS curve.
D)an increase in aggregate supply and the AS curve shifts leftward.
E)a decrease in aggregate supply and the AS curve shifts leftward.

Question

Quizplus · Accepted Answer

When the costs of production decrease, firms are able to produce more output at any given price level, leading to an increase in aggregate supply. This causes the AS curve to shift rightward. Therefore, option B is the correct answer. Options A and C are incorrect because a decrease in production costs would lead to an increase in the quantity of real GDP supplied, not a decrease. Option D is incorrect because a decrease in production costs would shift the AS curve rightward, not leftward. Option E is also incorrect for the same reason.

If the Costs of Production Decrease,there Is