Using the AS- AD model, which of the following would cause an increase in the natural level of output in the medium run?
A) An increase in the money supply.
B) An increase in government spending.
C) A decrease in the oil price.
D) An increase in the price target.
E) A decrease in consumer confidence.

Question

Quizplus · Accepted Answer

A decrease in the oil price would cause a shift to the right in the SRAS curve, as production costs decrease, leading to an increase in the natural level of output in the medium run. A, B, D, and E would only have short-term effects on output levels or no effect at all.

Using the AS- AD Model, Which of the Following Would