If the money prices of resources changes
A) the LAS curve shifts.
B) the SAS curve shifts.
C) the AD curve shifts.
D) the macroeconomic equilibrium is unaffected.

Question

Quizplus · Accepted Answer

The SAS (Short-Run Aggregate Supply) curve shifts when there are changes in the costs of production, including changes in the money prices of resources. This is because the SAS curve reflects the total production of goods and services in the economy at different price levels, assuming some input prices (like wages) are sticky in the short run. Changes in resource prices directly affect production costs, thus shifting the SAS curve.

If the Money Prices of Resources Changes