If an economic crisis caused the collapse of the automobile industry, then:a. there is a movement down the AS curve as output decreased. b. AS shifts right and output would decrease. c. AS shifts right and output would increase. d. AS shifts left and output would decrease. e. AS shifts left and the output would increase.

Question

Hugh Thomas

Business

27 April, 23:17

If an economic crisis caused the collapse of the automobile industry, then:a. there is a movement down the AS curve as output decreased. b. AS shifts right and output would decrease. c. AS shifts right and output would increase. d. AS shifts left and output would decrease. e. AS shifts left and the output would increase.

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Sterling · Answer 1

If an economic crisis caused the collapse of the automobile industry, then "AS shifts left and the output would increase".

Answer: Option E

Explanation:

The aggregate demand / aggregate supply model is a system that indicates what establishes the economy's total supply or total demand, as well as how the macroeconomic level interacts with total demand and supply.

In time, the vertical line portraying potential GDP or the "full employment scale of GDP" will also progressively shift to the right. As the cost of key inputs increases, the aggregate supply curve shifts to the left, allowing for a mixture of lower output, higher unemployment, and increased inflation.