Which of the following statements is true?
A)An increase in potential GDP increases aggregate supply and shifts the AS curve leftward.
B)A decrease in potential GDP decreases aggregate supply and shifts the AS curve leftward.
C)An increase in the money wage rate shifts the AS curve rightward.
D)A fall in the price level shifts the AS curve leftward.
E)An increase in the money wage rate increases potential GDP.

Question

Quizplus · Accepted Answer

A decrease in potential GDP typically occurs due to a decrease in factors of production or a decrease in technology. This would lead to a decrease in aggregate supply, which shifts the AS curve leftward. The other statements are incorrect.

Which of the Following Statements Is True