Which of the following changes shifts the SRAS curve down?
A)An increase in the labor force
B)An increase in the money supply
C)A decrease in government purchases
D)A decrease in firms' costs

Question

Quizplus · Accepted Answer

Decrease in firms' costs will shift the SRAS curve down, as firms can produce the same level of output at a lower cost, resulting in a decrease in the price level for a given level of output. The other options listed would not shift the SRAS curve down. An increase in the labor force would cause the SRAS curve to shift to the right, while an increase in the money supply and a decrease in government purchases would shift the AD curve to the right, causing an increase in both the price level and output level.

Which of the Following Changes Shifts the SRAS Curve Down