- CFA Exams
- CFA Level I Exam
- Study Session 4. Economics (1)
- Reading 14. Aggregate Output, Prices, and Economic Growth
- Subject 5. Shifts in Aggregate Demand and Supply
CFA Practice Question
A decrease in resource prices will ______ short-run aggregate supply and ______ long-run aggregate supply.
A. increase; increase
B. increase; not affect
C. not affect; increase
Explanation: The size of the economy's resource base changes the long-run aggregate supply and resource prices change the short-run aggregate supply. Unless the lower prices of resources reflect a long-term increase in the supply of resources, they will not alter long-run aggregate supply.
User Contributed Comments 1
| User | Comment |
|---|---|
| MaiHuong | Decrease in resource price doesn't mean increase in resource supply in long term |