When the price level falls,
A)the AS curve shifts rightward but the potential GDP line does not shift.
B)there is a movement upward along the AS curve.
C)the AS curve shifts leftward but the potential GDP line does not shift.
D)there is a movement downward along the AS curve.
E)both the potential GDP line and the AS curve shift leftward.

Question

Quizplus · Accepted Answer

When the price level falls, there is a movement downward along the Aggregate Supply (AS) curve, as the AS curve shows the relationship between the price level and the quantity of goods and services that firms are willing to produce.

When the Price Level Falls