If the money wage and other resource prices do not change when the price level rises by 10 per cent, ________.
A)the long- run aggregate supply curve shifts rightward
B)the short- run aggregate supply curve shifts leftward
C)the long- run aggregate supply curve shifts leftward
D)there is a movement along the short- run aggregate supply curve

Question

Quizplus · Accepted Answer

When the price level rises and money wages and other resource prices remain constant, there is a movement along the short-run aggregate supply curve, as firms respond to higher prices by increasing output.

If the Money Wage and Other Resource Prices Do Not