A common assumption among macroeconomists is that when real GDP exceeds potential output,factor prices rise and the
A)AS curve shifts to the left.
B)AD curve shifts to the right.
C)AS curve shifts to the right very rapidly.
D)AD curve shifts to the left rapidly.
E)none of the above - the AS curve remains unchanged.

Question

Quizplus · Accepted Answer

When real GDP exceeds potential output, it creates upward pressure on factor prices, leading to higher production costs and causing the Aggregate Supply (AS) curve to shift to the left.

A Common Assumption Among Macroeconomists Is That When Real GDP