An unanticipated decrease in short-run aggregate supply will lead to a
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A. B. C. D.D
An unanticipated reduction in short run aggregate supply will cause the price level to rise as the short run aggregate supply curve shifts left. Since people will believe that their lower incomes are temporary, households will reduce their current saving level to maintain current consumption at a level more consistent with their longer term perceived opportunities. This reduction in the supply of loanable funds causes the interest rate to increase.