-In the above figure, the short-run aggregate supply curve is SAS1. If the prices of resources fall, there is
A) an upward movement along SAS1.
B) a downward movement along SAS1.
C) a shift to SAS0.
D) a shift to SAS2.

Question

-In the above figure, the short-run aggregate supply curve is SAS1. If the prices of resources fall, there is
A) an upward movement along SAS1. 
B) a downward movement along SAS1. 
C) a shift to SAS0. 
D) a shift to SAS2.

Quizplus · Accepted Answer

A decrease in the prices of resources would reduce the cost of production, leading to an increase in supply at every price level. This is represented by a rightward shift of the short-run aggregate supply curve, from SAS1 to SAS2, not a movement along the same curve.

-In the Above Figure, the Short-Run Aggregate Supply Curve Is