In the basic AD/AS macro model,which of the following events could cause a negative AS shock?
A)a large decrease in wages
B)a large increase in business confidence
C)a large decrease in the net tax rate
D)a widespread outbreak of a serious infectious disease
E)a large increase in labour productivity

Question

Quizplus · Accepted Answer

A widespread outbreak of a serious infectious disease can cause a negative AS (aggregate supply) shock as it leads to disruptions in production and supply chains. It can result in a decrease in the availability of inputs such as labor and materials, leading to higher costs of production and decreased output, which can shift the AS curve to the left.

In the Basic AD/AS Macro Model,which of the Following Events