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

Question

Quizplus · Accepted Answer

When the costs of production decrease, firms are able to produce their goods and services at a lower cost, leading to an increase in their profitability. This, in turn, leads to an increase in their willingness to supply more goods and services at a given price level, which results in a rightward shift of the aggregate supply (AS) curve. Therefore, choice A, an increase in aggregate supply and the AS curve shifting rightward, is the correct answer.

If the Costs of Production Decrease,there Is