Given the aggregate demand curve, an increase in the supply of a productive resource will _____
A) increase the output level but leave the price level unchanged.
B) decrease both the output and price levels.
C) increase the price level and decrease the output level.
D) decrease the price level and increase the output level.
E) increase the price level but leave the output level unchanged.

Question

Quizplus · Accepted Answer

An increase in the supply of a productive resource will shift the aggregate supply (AS) curve to the right, increasing output and decreasing price level. Therefore, the best choice is D, which states that there will be a decrease in the price level and an increase in the output level.

Given the Aggregate Demand Curve, an Increase in the Supply