In the Short-Run Macroeconomics model, what happens when the Supply slope shifts to the right?
A. Prices decrease
B. Prices flatline
C. Deflation will occur
D. Both supply and prices stay the same
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Answer:
A
Explanation:
When capital increases, the aggregate supply curve will shift to the right, prices will drop, and the quantity of the good or service will increase. The short-run aggregate supply curve is an upward slope.
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