Asked by Camila Ramirez on Jun 22, 2024
Verified
The price level rises in the short run if
A) aggregate demand or aggregate supply shifts left.
B) aggregate demand shifts right or aggregate supply shifts left.
C) aggregate demand shifts left or aggregate supply shifts right.
D) aggregate demand or aggregate supply shifts right.
Price Level
The average of current prices across the entire spectrum of goods and services produced in an economy.
Short Run
A period in economics where at least one factor of production is fixed, limiting the ability to increase output.
Aggregate Demand
Aggregate demand is the total demand for all goods and services within an economy at a given overall price level and within a given time period.
- Identify how shifts in aggregate demand and aggregate supply affect the price level and real GDP in the short run.
Verified Answer
MZ
Mayte ZambranoJun 23, 2024
Final Answer :
B
Explanation :
The price level rises in the short run if aggregate demand shifts right (increasing demand for goods and services at the same price levels) or aggregate supply shifts left (decreasing the supply of goods and services at the same price levels), both of which lead to higher prices.
Learning Objectives
- Identify how shifts in aggregate demand and aggregate supply affect the price level and real GDP in the short run.