If global pollution causes climatic changes that permanently harm crop production worldwide,aggregate supply and demand analysis would lead us to expect:
A)an increase in the price level.
B)a decrease in the price level.
C)rightward shifts of the aggregate demand and aggregate supply curves.
D)a leftward shift of the aggregate demand curve.
E)an increase in the potential level of real GDP.

Question

Quizplus · Accepted Answer

A decrease in crop production would likely lead to a decrease in the aggregate supply, as it becomes more costly for businesses to produce goods. This decrease in supply, with demand remaining constant, would lead to an increase in the price level.

If Global Pollution Causes Climatic Changes That Permanently Harm Crop