A major drought hits the Prairies,causing sharply decreased harvests of grain.What is the most likely impact of this on short-run aggregate supply?
A)It will not shift, but the economy moves along the SRAS to a higher price level.
B)It will decrease.
C)It will not shift, but the economy moves along the SRAS to a lower price level.
D)It will increase.

Question

Quizplus · Accepted Answer

A drought causing decreased harvests of grain will lead to a decrease in the supply of input factors for agricultural production. This will increase the cost of producing goods and services, leading to a decreased short-run aggregate supply.

A Major Drought Hits the Prairies,causing Sharply Decreased Harvests of Grain.What