In the short run, a supply shock that shifts the short- run aggregate supply curve leftward real GDP and _ the price level.
A) decreases; lowers
B) decreases; raises
C) increases; raises
D) increases; lowers

Question

Quizplus · Accepted Answer

A leftward shift in the short-run aggregate supply curve would decrease real GDP and increase the price level. This is because the supply shock would cause a decrease in the quantity of goods and services supplied in the economy at any given price level, resulting in a higher price level for the same level of output.

In the Short Run, a Supply Shock That Shifts the Short-