Final answer:
Higher prices for widely used inputs across the economy impact aggregate supply, causing the SRAS curve to shift left, leading to a potential recession and higher unemployment.
option a is the correct
Step-by-step explanation:
The student asked which component of the macroeconomy is affected by higher prices for inputs that are widely used across the entire economy.
The correct answer is 'b. Supply'. Higher prices for inputs such as labor and energy products can cause the short-run aggregate supply (SRAS) curve to shift to the left. This shift means that at each given price level for outputs, businesses throughout the economy will produce less, as the increased input costs make production less profitable.
As a result, the economy can experience reduced GDP, recession, and higher unemployment. Aggregate supply is impacted by various economic events and policy decisions, such as changes in prices of key inputs or government, tax, and spending decisions.