Question
Using the aggregate demand-aggregate supply model, predict what happens in the short run when there is a general decrease in raw materials cost. Select one:
Using the aggregate demand-aggregate supply model, predict what happens in the short run when there is a general decrease in raw materials cost. Select one: a. The aggregate supply curve shifts right; the aggregate demand curve is not affected; price level decreases; real GDP increases. b. The aggregate supply curve shifts left; the aggregate demand curve is not affected; price level increases; real GDP decreases. c. The aggregate demand curve shifts right; the aggregate supply curve is not affected; price level and real GDP increase. d. The aggregate demand curve shifts left; the aggregate supply curve is not affected; price level and real GDP decrease.
I have seen answers for all of the options, but still cannot figure out which is the correct one, can I get an explanation for the answer and if so, why not the other options? thanks!
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