Assume the economy is initially operating at the natural level of output.Which of the following events will initially cause a shift of the aggregate supply curve?
A)an increase in the money supply
B)an increase in government spending
C)an increase in consumer confidence
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

None of the events listed will initially cause a shift of the aggregate supply curve. An increase in the money supply can lead to inflation but will not affect the supply of goods and services. An increase in government spending may create an initial increase in output, but if it is not sustainable, it will not affect the long-run supply. An increase in consumer confidence may lead to an increase in demand but will not affect the supply of goods and services.

Assume the Economy Is Initially Operating at the Natural Level