A leftward shift of the aggregate supply curve would tend to:
A) lower the price level.
B) increase real GDP.
C) lower both the price level and real GDP.
D) raise the price level and lower real GDP.
E) not change the price level

Question

Quizplus · Accepted Answer

A leftward shift of the aggregate supply curve indicates a decrease in the total supply of goods and services in an economy at every price level. This typically leads to higher prices (inflation) because the same amount of money is chasing fewer goods and services, and it reduces real GDP because there are fewer goods and services being produced.

A Leftward Shift of the Aggregate Supply Curve Would Tend