An Increase in Inflation Will Cause the Long-Run Aggregate Supply

question 3

Multiple Choice

An increase in inflation will cause the long-run aggregate supply curve to:

• A) shift inward.
• B) shift outward.
• C) not shift at all.
• D) shift randomly.

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Definitions:

Consumer Surplus

The incongruity between the price consumers are willing to offer for a good or service versus the final cost.

Increase Supply

An upward shift in the supply curve, indicating more of a good or service is available for sale at any given price, usually the result of factors like improved technology or decreased production costs.

Consumer Surplus

Consumer surplus is the difference between the total amount that consumers are willing to pay for a good or service and the total amount they actually pay.

Soybeans

Edible legumes native to East Asia, widely grown for their numerous uses, which include producing oil, as a source of protein, and in many food products.