Figure 22-8. The left-hand graph shows a short-run aggregate-supply (SRAS) curve and two aggregate-demand (AD) curves. On the right-hand diagram, "Inf Rate" means "Inflation Rate." -Refer to Figure 22-8. The shift of the aggregate-supply curve from AS₁ to AS₂ could be a consequence of A)an increase in the money supply. B)an adverse supply shock. C)a decrease of output from Y₁ to Y₂. D)a slow adjustment of people's expectation of the inflation rate.

Question

Quizplus · Accepted Answer

The shift of the aggregate-supply curve from AS₁ to AS₂ indicates a decrease in available output at every price level, which could be a consequence of an adverse supply shock such as a natural disaster or spikes in oil prices. None of the other choices would directly affect the position of the SRAS curve.