Question

If government regulations force employers to provide dental insurance, then there is a movement up the:________.

1. AS curve as price level increased.

2. AS shifts right and price level would decrease.

3. AS shifts right and price level would increase.

4. AS shifts left and price level would decrease.

5. AS shifts left and price level would increase.

Answer 1

The correct answer is the option 3: AS shifts right and price level would increase.

Step-by-step explanation:

To begin with, the Aggregate Supply Curve is the total amount of goods and services that the suppliers are willing and able to offer at a certain price level given and at a certain period of time. If the costs of the sellers increases then that would mean that they would try to obtain more profits so that would implicate in an increase in the amount of quantity offered by them. So that means that the aggregate supply curve would shift to the right and the price level would increase as the sellers would try to earn more profits so that they could cover all the new costs given by the government.