Given the aggregate demand curve,a beneficial supply shock would
A)increase output and the price level
B)decrease output and the price level
C)increase output and lower the price level
D)decrease output and increase the price level
E)cause no change in output or the price level

Question

Quizplus · Accepted Answer

A beneficial supply shock would shift the aggregate supply curve to the right, resulting in an increase in output and a decrease in the price level. Therefore, option C is the correct answer. Options A, B, and D are incorrect because they suggest a negative impact on either output or price level, which contradicts the concept of a beneficial supply shock. Option E is incorrect because it suggests no change, which is not consistent with the impact of a beneficial supply shock.

Given the Aggregate Demand Curve,a Beneficial Supply Shock Would