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9 March, 22:49

Within the AD/AS model, which one of the following adjustments will cause the economy to return to its long-run capacity when output is temporarily greater than the economy's long-run potential?

a. Lower wage rates and resource prices reduce short-run aggregate supply.

b. Lower interest rates increase aggregate demand and, thereby, stimulate output.

c. Higher wage rates and resource prices reduce short-run aggregate supply.

d. A decrease in prices reduces aggregate demand.

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Answers (1)
  1. 9 March, 23:19
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    Answer and Explanation:

    Option C is the correct answer

    C. Higher wage rates and resource prices reduce short-run aggregate supply.
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