An increase in the price level will:
A)increase the quantity of RGDP supplied, but not increase short-run aggregate supply.
B)decrease the quantity of RGDP supplied, but not decrease short-run aggregate supply.
C)increase short-run aggregate supply.
D)decrease short-run aggregate supply.

Question

An increase in the price level will:
A)​increase the quantity of RGDP supplied, but not increase short-run aggregate supply.
B)​decrease the quantity of RGDP supplied, but not decrease short-run aggregate supply.
C)​increase short-run aggregate supply.
D)​decrease short-run aggregate supply.

Quizplus · Accepted Answer

An increase in the price level leads to an increase in the quantity of Real Gross Domestic Product (RGDP) supplied in the short run, as producers are willing to supply more at higher prices. This is represented by a movement along the short-run aggregate supply curve, not a shift of the curve itself.

An Increase in the Price Level Will