Question

This will most likely result in which of the following changes in the short-run and long-run aggregate supply curves and the

production possibilities curve?
Elimination Tool
Select one answer
A
B
C
D
SRAS decrease, LRAS no change, PPC no change
SRAS decrease, LRAS decrease, PPC shifts left
SRAS increase, LRAS no change, PPC shifts left
SRAS increase, LRAS increase, PPC no change

Answer 1

A shift in the SRAS curve to the right will result in a greater real GDP and downward pressure on the price level in the short-run, while the long-run aggregate supply curve (LRAS) and production possibilities curve (PPC) do not change. The correct answer is option A.

Step-by-step explanation:

A shift in the SRAS curve to the right will result in a greater real GDP and downward pressure on the price level in the short-run.

However, in the long-run, the SRAS curve does not change and the production possibilities curve (PPC) also does not change.

Therefore, the correct answer is SRAS decrease, LRAS no change, PPC no change (option A).