An increase in the price level leads to
A)an upward movement along the aggregate supply curve.
B)a downward movement along the aggregate supply curve.
C)a leftward shift of the aggregate supply curve.
D)a rightward shift of the aggregate supply curve.
E)neither a movement along the aggregate supply curve nor a shift of the aggregate supply curve.

Question

Quizplus · Accepted Answer

An increase in the price level will cause firms to produce more as they are able to earn higher profits. This leads to an upward movement along the aggregate supply curve.

An Increase in the Price Level Leads to