An increase in the price level will
A)shift the short-run aggregate supply curve to the left.
B)shift the short-run aggregate supply curve to the right.
C)move the economy up along a stationary short-run aggregate supply curve.
D)move the economy down along a stationary short-run aggregate supply curve.
E)shift the long run aggregate supply curve to the right.

Question

Quizplus · Accepted Answer

An increase in the price level does not shift the short-run aggregate supply (SRAS) curve itself but results in a movement along the SRAS curve. Specifically, it moves the economy up along a stationary SRAS curve because, as prices increase, producers are willing to supply more, assuming other factors remain constant.

An Increase in the Price Level Will