Question

The short-run aggregate supply curve will decrease if:

A. the aggregate price level falls. commodity prices rise.

B. government tax revenues fall.

C. the aggregate price level falls, commodity prices rise, or if government tax revenues fall.

Answer 1

Answer: A. the aggregate price level falls. commodity prices rise.

Explanation: In short-run, the aggregate supply is usually a graph pointing upward and with a sloping curve. The short-run aggregate supply curve usually points upward sloping because it indicates quantity supplied which increases when the price rises. In the short-run, organisations usually have only one fixed factor of production which is capital.