A rightward shift of long-run aggregate supply without any change in aggregate demand
A) will leave real GDP unchanged.
B) results in a lower price level.
C) increases the price level without any change in real GDP.
D) increases the price level along with an increase in real GDP.

Question

Quizplus · Accepted Answer

A rightward shift in long-run aggregate supply implies an increase in the potential output level of an economy. This means that more goods and services can be produced without triggering inflationary pressures. As a result, the equilibrium price level will decrease as firms lower their prices to compete for customers. However, the real GDP will remain the same since there has been no change in aggregate demand.

A Rightward Shift of Long-Run Aggregate Supply Without Any Change