During the past 50 years, the production possibilities of the United States have expanded, increasing both short-run and long-run aggregate supply. Other things constant, this would lead to
A) an expansion in output and an increase in prices.
B) an expansion in output and a decrease in prices.
C) no change in either output or prices.
D) no change in output and a decrease in prices.

Question

Quizplus · Accepted Answer

An expansion in short-run and long-run aggregate supply means that the economy can produce more goods and services at lower production costs. This leads to an increase in output and a decrease in prices. Therefore, choice B is the correct answer.

During the Past 50 Years, the Production Possibilities of the United