Which of the following shifts the short-run,but not the long-run,aggregate supply right?
A)a decrease in the price level
B)a decrease in the expected price level
C)a decrease in the capital stock
D)a decrease in the savings rate

Question

Quizplus · Accepted Answer

A decrease in the expected price level shifts the short-run aggregate supply right because it reduces the costs of production and increases profitability in the short run. However, in the long run, prices and wages adjust to the new expected price level, resulting in no change in the long-run aggregate supply. The other options listed would not shift the short-run aggregate supply curve by themselves.

Which of the Following Shifts the Short-Run,but Not the Long-Run,aggregate