At points on the short-run aggregate supply curve, but to the right of the long-run aggregate supply curve, resources are:
A)overutilized, making it more likely that the short-run aggregate supply curve will shift up (to the left).
B)overutilized, making it more likely that the short-run aggregate supply curve will shift down (to the right).
C)underutilized, making it more likely that the short-run aggregate supply curve will shift up (to the left).
D)underutilized, making it more likely that the short-run aggregate supply curve will shift down (to the right).

Question

Quizplus · Accepted Answer

When points are to the right of the long-run aggregate supply curve, it indicates that resources are overutilized. This overutilization can lead to increased costs for businesses as they pay more for labor and materials, which in turn makes it more likely that the short-run aggregate supply curve will shift up (to the left), reflecting a decrease in the total quantity of goods and services supplied at any given price level.

At Points on the Short-Run Aggregate Supply Curve, but to the Right