Suppose that real domestic output in an economy is 20 units,the quantity of inputs is 10,and the price of each input is $4.
-Refer to the above information.Given an increase in input price from $4 to $6,we would expect the aggregate:
A) supply curve to shift to the left.
B) supply curve to shift to the right.
C) demand curve to shift to the left.
D) demand curve to shift to the right.

Question

Quizplus · Accepted Answer

An increase in input price will lead to higher production costs, reducing profitability and reducing the incentive for firms to supply goods and services. This will cause a decrease in aggregate supply and shift the supply curve to the left.

Suppose That Real Domestic Output in an Economy Is 20