A movement along the SAS curve that brings a lower price level and a decrease in real GDP is equivalent to a

Question

Quizplus · Accepted Answer

A movement along the SAS (short-run aggregate supply) curve is caused by a change in the price level, while real GDP is held constant. This is different from a shift in the SAS curve, which would be caused by a change in factors such as technology, input prices or productivity. A movement along the short-run Phillips curve shows a trade-off between inflation and unemployment in the short-run. In this case, a lower price level would lead to a decrease in the inflation rate but also a decrease in real GDP, which would result in an increase in the unemployment rate. So, the correct answer is choice A.

A Movement Along the SAS Curve That Brings a Lower