A decrease in aggregate supply in the short run is
A)reflected in a movement to the left along the AS curve.
B)reflected in a shift to the right in the AS curve.
C)interpreted to mean that less total output will be supplied at any given price level.
D)caused by a decrease in the price level.
E)caused by an increase in the price level.

Question

Quizplus · Accepted Answer

A decrease in aggregate supply means that fewer goods and services are being produced at any given price level, leading to a leftward shift in the AS curve. This is because factors of production such as labor, capital, and raw materials have become more expensive or less available, leading to higher costs of production and lower output. Therefore, choice C is the best answer as it correctly interprets the meaning of a decrease in aggregate supply. Choices A and B are incorrect as they describe movements along or shifts in the AS curve, but do not explain the cause or interpretation of the change in aggregate supply. Choices D and E are also incorrect as changes in the price level do not cause changes in aggregate supply, but rather reflect changes in aggregate demand.

A Decrease in Aggregate Supply in the Short Run Is