An increase in short-run aggregate supply could be the result of:
A) an increase in the general price level.
B) a negative supply shock.
C) an increase in the price of oil.
D) an increase in consumption spending.
E) a reduction in expected future prices.

Question

Quizplus · Accepted Answer

A reduction in expected future prices would lead to an increase in production as firms try to sell their goods before prices fall further. This would result in an increase in short-run aggregate supply. The other options all suggest factors that would decrease short-run aggregate supply.

An Increase in Short-Run Aggregate Supply Could Be the Result