A rightward shift of the aggregate supply curve in the short run leads to which combination?

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Multiple Choice

A rightward shift of the aggregate supply curve in the short run leads to which combination?

Explanation:
A rightward shift of the short-run aggregate supply (SRAS) means firms can produce more at every price. With demand held constant in the short run, this higher output requires more workers, so unemployment falls. At the same time, supplying more goods reduces upward price pressure, so the overall price level falls. So the combination is falling unemployment and falling prices. The other options would imply higher prices or no change in employment, which isn’t consistent with a rightward SRAS shift when demand stays the same.

A rightward shift of the short-run aggregate supply (SRAS) means firms can produce more at every price. With demand held constant in the short run, this higher output requires more workers, so unemployment falls. At the same time, supplying more goods reduces upward price pressure, so the overall price level falls. So the combination is falling unemployment and falling prices. The other options would imply higher prices or no change in employment, which isn’t consistent with a rightward SRAS shift when demand stays the same.

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