A negative supply shock causes ________ to ________.
A)aggregate demand;increase
B)aggregate demand;decrease
C)short-run aggregate supply;decrease
D)short-run aggregate supply;increase

Question

Quizplus · Accepted Answer

A negative supply shock reduces the availability of inputs and raises the costs of production, which leads to a decrease in short-run aggregate supply. This means that firms are able to supply less output at any given price level, which leads to a leftward shift in the short-run aggregate supply curve. As a result, both output and prices will decrease in the short run.

A Negative Supply Shock Causes ________ to ________

A Negative Supply Shock Causes to