Suppose there is an increase in the short-run aggregate supply with no change in the long-run aggregate supply. This situation could be the result of
A) an increase in the price of oil.
B) a decrease in the money wage rate.
C) a technological advancement.
D) an increase in the quantity of capital.

Question

Quizplus · Accepted Answer

A decrease in the money wage rate reduces production costs, leading to an increase in short-run aggregate supply without affecting long-run aggregate supply.

Suppose There Is an Increase in the Short-Run Aggregate Supply