A movement down and to the left along the aggregate supply curve will occur when
A) firms' average markup is stable and a decrease in real GDP causes unit costs to fall
B) world oil prices fall,thus decreasing the price level
C) a change in fiscal policy causes aggregate expenditure to increase
D) firms decide to produce less than before at each price level
E) an increase in real GDP causes the price level to fall

Question

Quizplus · Accepted Answer

A movement down and to the left along the aggregate supply curve, also known as a shift of the curve to the right, occurs when unit costs fall due to a decrease in real GDP while firms' average markup remains stable. This leads to an increase in production at each price level. None of the other choices result in a movement down and to the left along the aggregate supply curve.

A Movement Down and to the Left Along the Aggregate