(Figure: Shifts in SRAS and AD) Starting at equilibrium point d,if the cost of inputs rises,the short-run equilibrium will move to point _____,and thus real output will _____ and the price level will _____.
A) a;decrease;stay the same
B) b;decrease;increase
C) c;stay the same;increase
D) There is not enough information to answer this question.

Question

(Figure: Shifts in SRAS and AD)  Starting at equilibrium point d,if the cost of inputs rises,the short-run equilibrium will move to point _____,and thus real output will _____ and the price level will _____.
A) a;decrease;stay the same 
B) b;decrease;increase 
C) c;stay the same;increase 
D) There is not enough information to answer this question.

Quizplus · Accepted Answer

When the cost of inputs rises, the SRAS curve shifts leftward, causing a decrease in real output and an increase in the price level. The new equilibrium point will be at point b, where the AD curve intersects the new SRAS curve.

(Figure: Shifts in SRAS and AD) Starting at Equilibrium