A Leftward Shift in the Short-Run Aggregate Supply Curve Causes

question 53

Multiple Choice

A leftward shift in the short-run aggregate supply curve causes

• A) price levels to fall.
• B) real output to rise.
• C) demand-pull inflation.
• D) simultaneous inflation and a decrease in total real output.
• E) unemployment to fall.

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Definitions:

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to replace more expensive items with cheaper ones.

Relative Price

Relative Price is the price of one good or service compared to another, usually reflecting its value in terms of another item rather than its absolute price in currency.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price point.

Marginal Utility

The heightened satisfaction or value achieved by consuming one additional unit of a product or service.