The decrease in short-run aggregate supply during the Great Recession was caused by

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The decrease in short-run aggregate supply during the Great Recession was largely caused by businesses reducing their production capacity by closing plants and laying off workers. As a result, there were fewer goods and services being produced, leading to a decrease in aggregate supply. Factors such as excessive consumer debt, miscalculation of the risk of subprime mortgages, and the worldwide glut of savings may have contributed to the overall economic conditions that led to the Great Recession, but they were not the direct cause of the decrease in short-run aggregate supply.

The Decrease in Short-Run Aggregate Supply During the Great Recession