What is the result of a decrease in the AS curve?
A)It will decrease the price level and decrease Real GDP.
B)It will decrease the price level and raise Real GDP.
C)It will raise the price level and decrease Real GDP.
D)It will raise the price level and raise Real GDP.
E)It will decrease the price level and may or may not change Real GDP depending on the shape of the SAS curve.

Question

Quizplus · Accepted Answer

A decrease in the AS curve means there is a decrease in the supply of goods and services, often due to factors like a decrease in productivity or an increase in input costs. This will result in higher prices (inflation) and a decrease in Real GDP as the economy is producing less.

What Is the Result of a Decrease in the AS Curve