When the aggregate price level rises:
A) AD will shift right.
B) SRAS will shift left.
C) there will be a movement along the SRAS curve.
D) AD will shift left.

Question

Quizplus · Accepted Answer

When aggregate price level rises, firms will supply more output, as they want to increase their profits. This movement along the SRAS curve results in an increase in the quantity of goods and services supplied. AD will remain unchanged because the increase in the aggregate price level will not affect consumers' wealth, net exports, or the government's fiscal policy. Therefore, there will be a movement along the SRAS curve.

When the Aggregate Price Level Rises