Other things equal, the short-run aggregate supply curve shifts positions when:
A)the price level changes.
B)the rate of inflation changes.
C)input prices change.
D)aggregate demand changes.

Question

Quizplus · Accepted Answer

The short-run aggregate supply (SRAS) curve shows the relationship between the price level and the quantity of real GDP supplied by firms in the short run, holding constant all other factors that affect production decisions. However, changes in input prices, such as wages, energy costs, and materials, affect firms' production costs and thus their willingness and ability to sell output at each price level. As a result, the SRAS curve will shift leftward or rightward depending on whether input prices rise or fall, causing a decrease or increase in the quantity of real GDP supplied at each price level. Changes in aggregate demand, inflation, and the price level may affect the position of the LRAS curve, but not the SRAS curve in the short run.

Other Things Equal, the Short-Run Aggregate Supply Curve Shifts Positions