Which of the following causes an increase in short-run aggregate supply?
A) The price level increases.
B) The price level decreases.
C) Firms and workers expect the price level to fall.
D) Firms and workers expect the price level to rise.
E) There are fewer workers in the labor force.

Question

Quizplus · Accepted Answer

If firms and workers expect the price level to fall, they may try to sell more goods and services in the short run to avoid lower profits in the future. This would increase short-run aggregate supply.

Which of the Following Causes an Increase in Short-Run Aggregate