A decrease in the price level accompanied by no change in the money wage rate leads to movement along the _ aggregate supply curve.
A) an upward; long- run
B) an upward; short- run
C) a downward; short- run
D) a downward; long- run

Question

Quizplus · Accepted Answer

A decrease in the price level with no change in the money wage rate leads to a movement along the short-run aggregate supply curve, as firms adjust their output in response to changes in the price level while wages remain sticky.

A Decrease in the Price Level Accompanied by No Change