Figure 15.2 -Refer to Figure 15.2. This economy cannot continue to produce Y₁at point B because: A) the price of inputs will decrease shifting the aggregate supply curve to AS₂. B) the price of raw material will increase shifting the aggregate demand curve to AD₂. C) the price of raw material and wages will increase shifting the aggregate supply curve to AS₁. D) all of the above

Question

Quizplus · Accepted Answer

In order for the economy to continue producing at point B, the price of raw materials and wages would need to increase, shifting the aggregate supply curve to the right (AS₁). A decrease in the price of inputs or an increase in the price of raw materials (as in options A and B) would actually shift the curves in the opposite direction, making it impossible to continue producing at point B. Therefore, the correct answer is C.

Figure 15.2 -Refer to Figure 15.2. This Economy Cannot Continue to Produce