The short-run aggregate supply curve is most likely to shift down (to the right)when actual output is:
A)equal to potential output.
B)less than potential output.
C)greater than potential output.
D)not equal to potential output, regardless of whether it is above or below.

Question

Quizplus · Accepted Answer

The short-run aggregate supply curve is most likely to shift down (to the right) when actual output is less than potential output. This is because when actual output is below potential, there is slack in the economy (such as unemployment), which can lead to an increase in production without a corresponding increase in prices, thus shifting the supply curve to the right.

The Short-Run Aggregate Supply Curve Is Most Likely to Shift