A change in the aggregate price level moves the economy along a given aggregate supply curve.

Question

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A change in the aggregate price level will affect the quantity of goods and services that firms are willing to supply at a given price level. This movement along a given aggregate supply curve is known as a change in quantity supplied. A shift in the aggregate supply curve occurs when there is a change in the factors affecting production costs or the availability of production inputs, such as labor or capital.

A Change in the Aggregate Price Level Moves the Economy