A fall in the price level
A) increases short-run aggregate supply.
B) decreases short-run aggregate supply.
C) increases aggregate quantity supplied.
D) decreases aggregate quantity supplied.
E) increases aggregate demand.

Question

Quizplus · Accepted Answer

A fall in the price level typically decreases the aggregate quantity supplied because producers are less willing to supply goods at lower prices, assuming other factors remain constant.

A Fall in the Price Level