An increase in the general price level will lead to
A) an upward movement along the short-run aggregate supply curve as firms increase output.
B) a rightward shift of the short-run aggregate supply curve as firms increase output.
C) a downward movement along the short-run aggregate supply curve as firms decrease output.
D) a leftward shift of the short-run aggregate supply curve as firms decrease output.
E) no change in output because input prices are sticky.

Question

Quizplus · Accepted Answer

In the short run, an increase in the general price level typically leads to an upward movement along the short-run aggregate supply curve as firms respond to higher prices by increasing output.

An Increase in the General Price Level Will Lead to