The aggregate quantity of goods and services produced will decrease at every price level when resource price rises.

Question

Quizplus · Accepted Answer

When resource prices rise, the cost of production increases. As a result, firms will produce fewer goods and services to reduce their costs and maintain profitability. This will lead to a decrease in the aggregate quantity of goods and services produced, regardless of the price level.

The Aggregate Quantity of Goods and Services Produced Will Decrease