Figure 15-2

-Refer to Figure 15-2.Ceteris paribus,a decrease in productivity would be represented by a movement from
A) SRAS₁ to SRAS₂.
B) SRAS₂ to SRAS₁.
C) point A to point B.
D) point B to point A.

Question

Figure 15-2
 
-Refer to Figure 15-2.Ceteris paribus,a decrease in productivity would be represented by a movement from
A) SRAS₁ to SRAS₂. 
B) SRAS₂ to SRAS₁. 
C) point A to point B. 
D) point B to point A.

Quizplus · Accepted Answer

A decrease in productivity would result in higher costs of production, leading to a decrease in aggregate supply. This decrease in aggregate supply would be represented by a shift of the short-run aggregate supply (SRAS) curve to the left, from SRAS₂ to SRAS₁. Therefore, the correct answer is option B which represents a movement from SRAS₂ to SRAS₁.

Figure 15-2 -Refer to Figure 15-2.Ceteris Paribus,a Decrease in Productivity Would Be