The aggregate supply curve will shift downward in response to:
A) an increase in the expected rate of inflation.
B) a decrease in the expected rate of inflation.
C) an increase in potential GDP.
D) a decrease in potential GDP.

Question

Quizplus · Accepted Answer

A decrease in the expected rate of inflation reduces production costs, leading to an increase in aggregate supply, which shifts the curve downward.

The Aggregate Supply Curve Will Shift Downward in Response To