The quantity of RGDP supplied will decrease in both the short run and long run when the price level falls.

Question

Quizplus · Accepted Answer

When the price level falls, the quantity of RGDP supplied may decrease in the short run due to sticky wages and prices, but in the long run, firms adjust their production levels and wages and prices become more flexible, leading to an increase in the quantity of RGDP supplied. This is known as the long-run aggregate supply curve.

The Quantity of RGDP Supplied Will Decrease in Both the Short