AP Macroeconomics Quiz: Short Run Aggregate Supply Sras

What this quiz covers

This quiz focuses on Short Run Aggregate Supply Sras, giving you a quick way to practice the rules, question types, and explanations that matter most for AP Macroeconomics.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

Question 1

1. A negative supply shock shifts SRAS left, raising the price level and lowering real GDP in the short run. (correct answer)
2. A positive productivity shock shifts SRAS right, raising the price level and raising real GDP in the short run.
3. An increase in aggregate demand shifts SRAS right, raising the price level and raising real GDP in the short run.
4. A fall in nominal wages shifts SRAS left, raising the price level and lowering real GDP in the short run.
5. A negative supply shock shifts SRAS right, lowering the price level and raising real GDP in the short run.

Explanation: SRAS shows how much output firms produce at different price levels when some costs are sticky in the short run. A pandemic that reduces labor availability and disrupts supply chains is a classic negative supply shock - it directly impairs firms' ability to produce by limiting key inputs and raising per-unit costs. With sticky wages and prices, firms cannot immediately adjust all costs, leading to higher production costs per unit of output. This shifts SRAS leftward from SRAS₁ to SRAS₂, as firms produce less at any given price level. The leftward shift causes the price level to rise and real GDP to fall - a stagflationary outcome. Students often confuse pandemic effects with demand shocks, but labor shortages and supply chain issues directly affect production capacity. The strategy: events that reduce input availability or raise input costs shift SRAS left, causing higher prices and lower output.

Question 2

1. SRAS shifts right, causing the price level to fall and real GDP to rise in the short run. (correct answer)
2. SRAS shifts left, causing the price level to rise and real GDP to fall in the short run.
3. SRAS shifts right, causing the price level to rise and real GDP to rise in the short run.
4. SRAS shifts left, causing the price level to fall and real GDP to rise in the short run.
5. There is a movement along SRAS because productivity changes only affect aggregate demand.

Explanation: SRAS represents the relationship between price level and real GDP when input prices adjust slowly. When firms adopt new technology that increases labor productivity, workers can produce more output per hour, effectively reducing the per-unit cost of production. With sticky nominal wages in the short run, firms benefit from lower costs per unit of output produced. This positive productivity shock shifts SRAS rightward from SRAS₁ to SRAS₂, as firms are willing to produce more at any given price level. The rightward shift leads to a lower price level and higher real GDP - an ideal economic outcome. A common error is thinking productivity only affects long-run supply, but productivity improvements immediately reduce costs and shift SRAS. The key principle: positive productivity shocks (technological improvements) shift SRAS right, lowering prices and increasing output.

Question 3

1. SRAS shifts left, so the price level rises and real GDP falls in the short run.
2. SRAS shifts right, so the price level falls and real GDP rises in the short run. (correct answer)
3. SRAS shifts right, so the price level rises and real GDP falls in the short run.
4. SRAS shifts left, so the price level falls and real GDP rises in the short run.
5. There is a movement along SRAS because lower input prices increase aggregate demand in the short run.

Explanation: SRAS represents the relationship between price level and real GDP when input prices adjust slowly. When key commodity prices fall sustainably, this directly reduces firms' input costs for materials used in production. With sticky wages and some sticky prices, firms benefit from lower per-unit production costs and can profitably increase output at any given price level. This positive cost shock shifts SRAS rightward from SRAS₁ to SRAS₂. The rightward shift results in a lower price level and higher real GDP, as firms expand production and competition drives prices down. A common error is thinking lower input prices affect demand; they actually change firms' cost structure and shift SRAS. The key principle: lower input costs (commodities, energy, materials) shift SRAS right, leading to lower prices and higher output in the short run.

Question 4

1. Lower price level and higher real GDP because SRAS shifts right when input prices rise.
2. Higher price level and lower real GDP because SRAS shifts left when input prices rise. (correct answer)
3. Higher price level and higher real GDP because SRAS shifts right when input prices rise.
4. Lower price level and lower real GDP because SRAS shifts left when input prices rise.
5. No change in price level or real GDP because wages adjust instantly to input price changes.

Explanation: The short-run aggregate supply (SRAS) curve represents how much output firms produce at various price levels when some costs are sticky. A spike in natural gas prices directly increases firms' input costs for heating and electricity—essential expenses for most businesses. When product prices don't adjust immediately in the short run, firms face squeezed profit margins as their costs rise faster than their revenues. The graph shows SRAS shifting leftward from SRAS₁ to SRAS₂, indicating that higher production costs make firms willing to supply less output at each price level. This leftward shift results in a new equilibrium with a higher price level and lower real GDP—the stagflation outcome. A key misconception is thinking input price changes affect only specific industries; remember that energy costs affect nearly all firms, so energy price spikes shift the entire SRAS curve left.

Question 5

1. An increase in the price level and a decrease in real GDP caused by a leftward shift of SRAS from a negative supply shock. (correct answer)
2. A decrease in the price level and an increase in real GDP caused by a rightward shift of SRAS from a negative supply shock.
3. An increase in the price level and an increase in real GDP caused by a rightward shift of SRAS from higher nominal wages.
4. A decrease in the price level and a decrease in real GDP caused by a leftward shift of SRAS from higher productivity.
5. No change in the price level and no change in real GDP because the economy is always in the long run.

Explanation: The short-run aggregate supply (SRAS) curve shows the quantity of output firms will produce at different price levels when wages and many prices are sticky. A pandemic causing worker absences and shutdowns is a negative supply shock—it reduces firms' ability to produce efficiently, raising per-unit costs even when nominal wages don't change. With sticky wages and prices, firms cannot immediately adjust all costs and prices to this new reality. The graph depicts SRAS shifting leftward from SRAS₁ to SRAS₂, meaning firms produce less at every price level due to higher costs and reduced productivity. This leftward shift results in stagflation: a higher price level and lower real GDP simultaneously. A key misconception is thinking the economy instantly adjusts to long-run equilibrium; in reality, sticky prices create short-run effects where cost increases shift SRAS left, causing both inflation and reduced output.

Question 6

1. An increase in the price level and a decrease in real GDP caused by a leftward shift of SRAS due to higher productivity.
2. A decrease in the price level and an increase in real GDP caused by a rightward shift of SRAS due to higher productivity. (correct answer)
3. An increase in the price level and an increase in real GDP caused by a rightward shift of SRAS due to higher input prices.
4. A decrease in the price level and a decrease in real GDP caused by a leftward shift of SRAS due to higher productivity.
5. No change in the price level and no change in real GDP because productivity changes shift only aggregate demand.

Explanation: The short-run aggregate supply (SRAS) curve represents the relationship between price levels and real GDP when nominal wages and some other input prices are sticky. When firms adopt new logistics software that increases productivity, workers can produce more output per hour without any change in nominal wages. This effectively reduces the per-unit cost of production—firms get more output from the same inputs. The graph shows SRAS shifting rightward from SRAS₁ to SRAS₂, indicating firms are willing to supply more output at each price level. This rightward shift leads to a new equilibrium with a lower price level and higher real GDP—the opposite of stagflation. Students often confuse productivity improvements with cost increases; remember that anything reducing per-unit costs (like higher productivity) shifts SRAS right, while anything increasing per-unit costs shifts SRAS left.

Question 7

1. The price level rises and real GDP falls in the short run. (correct answer)
2. The price level falls and real GDP rises in the short run.
3. The price level rises and real GDP rises in the short run.
4. The price level falls and real GDP falls in the short run.
5. The price level and real GDP both remain unchanged in the short run.

Explanation: The short-run aggregate supply (SRAS) curve shows the relationship between the price level and real GDP when some input prices, particularly wages, are sticky. When a pandemic reduces labor availability through illness, caregiving needs, or health concerns, firms face a smaller workforce and must often pay higher wages or overtime to maintain operations, raising their per-unit labor costs. Since many wages and input contracts adjust slowly in the short run, firms cannot immediately renegotiate all costs, causing the SRAS curve to shift leftward from SRAS1 to SRAS2. This adverse supply shock means firms produce less at every price level due to both higher costs and reduced capacity. The result is stagflation: real GDP falls as production declines, while the price level rises as firms pass on their higher costs to consumers. A common misconception is viewing pandemics only through demand effects—while spending may change, the supply-side disruptions through SRAS are often more significant. Remember the key principle: when production costs rise or capacity falls, SRAS shifts left, causing the painful combination of higher prices and lower output.

Question 8

1. SRAS shifts right; the price level falls and real GDP rises in the short run.
2. SRAS shifts left; the price level rises and real GDP falls in the short run. (correct answer)
3. SRAS shifts left; the price level falls and real GDP rises in the short run.
4. SRAS shifts right; the price level rises and real GDP rises in the short run.
5. SRAS does not shift; higher nominal wages only affect long-run aggregate supply.

Explanation: The short-run aggregate supply (SRAS) curve shows how much output firms will produce at different price levels when some input prices are sticky or slow to adjust. When nominal wages rise due to a new labor contract while product prices adjust more slowly, firms face higher per-unit labor costs that cannot be immediately offset by raising prices. This increase in production costs shifts the SRAS curve leftward from SRAS1 to SRAS2, indicating that firms will supply less output at any given price level. The result is a decrease in real GDP as firms cut production to maintain profitability, while the price level rises as firms eventually pass on their higher labor costs to consumers. A common misconception is thinking wage increases shift AD through higher consumer spending—while this may happen, the immediate effect on SRAS through higher costs dominates in the short run. Remember the key strategy: changes in input costs (wages, energy, materials) shift SRAS, not changes in spending patterns.

Question 9

1. SRAS shifts right; the price level rises and real GDP rises in the short run.
2. SRAS shifts left; the price level rises and real GDP falls in the short run. (correct answer)
3. SRAS shifts right; the price level falls and real GDP rises in the short run.
4. SRAS shifts left; the price level falls and real GDP rises in the short run.
5. SRAS does not shift; the change is a movement along SRAS caused by higher aggregate demand.

Explanation: The short-run aggregate supply (SRAS) curve shows the relationship between the price level and real GDP when some input prices, particularly wages, are sticky or slow to adjust. When oil and natural gas prices increase, firms face higher per-unit production costs for energy, transportation, and materials. Since nominal wages are sticky in the short run, firms cannot immediately offset these higher costs by reducing wages, so the SRAS curve shifts left from SRAS1 to SRAS2. This leftward shift means that at any given price level, firms are now willing to supply less output because production has become more expensive. The result is stagflation: the price level rises as firms pass on higher costs to consumers, while real GDP falls as the economy produces less. A common misconception is confusing this with an AD shift—remember that cost changes shift SRAS, while spending changes shift AD.

Question 10

1. A rightward shift of SRAS that raises the price level and raises real GDP in the short run.
2. A leftward shift of SRAS that raises the price level and lowers real GDP in the short run. (correct answer)
3. A leftward shift of SRAS that lowers the price level and lowers real GDP in the short run.
4. A movement along SRAS that raises the price level and lowers real GDP in the short run.
5. A rightward shift of SRAS that lowers the price level and raises real GDP in the short run.

Explanation: The short-run aggregate supply (SRAS) curve shows the relationship between the price level and real GDP when input prices, especially wages, are sticky and don't adjust immediately. When oil prices rise, this increases firms' energy costs, which are a key input in production. Since wages and many prices are sticky in the short run, firms face higher per-unit production costs without being able to immediately adjust all prices or wages. This causes the SRAS curve to shift leftward (from SRAS₁ to SRAS₂), meaning firms will produce less output at any given price level. The result is stagflation: the price level rises while real GDP falls, creating both inflation and reduced economic output. The key strategy here is that when input costs rise (negative supply shock), SRAS shifts left, causing higher prices and lower output.

Question 11

1. SRAS shifts left, so the price level rises and real GDP falls in the short run.
2. SRAS shifts right, so the price level falls and real GDP rises in the short run. (correct answer)
3. SRAS shifts left, so the price level falls and real GDP rises in the short run.
4. SRAS shifts right, so the price level rises and real GDP falls in the short run.
5. There is a movement along SRAS because wages are fully flexible in the short run.

Explanation: SRAS shows the relationship between price level and real GDP when some input costs are fixed in the short run. When nominal wages decline through renegotiated contracts, this directly reduces firms' per-unit labor costs, which typically represent a large portion of total costs. With other prices adjusting slowly, firms benefit from lower production costs and can profitably produce more at any given price level. This causes SRAS to shift rightward from SRAS₁ to SRAS₂. The rightward shift results in a lower price level and higher real GDP, as increased production and competition drive prices down while output expands. Students sometimes think wage changes cause movements along curves, but wages are an input cost that shifts SRAS. Remember: lower input costs (including wages) shift SRAS right, leading to lower prices and higher output.

Question 12

1. It is a leftward SRAS shift that raises the price level and lowers real GDP in the short run. (correct answer)
2. It is a movement along SRAS that raises the price level and lowers real GDP in the short run.
3. It is a rightward SRAS shift that lowers the price level and raises real GDP in the short run.
4. It is a leftward SRAS shift that lowers the price level and raises real GDP in the short run.
5. It is a rightward SRAS shift that raises the price level and lowers real GDP in the short run.

Explanation: SRAS shows the quantity of output firms will produce at different price levels when some input costs are sticky. When imported raw material prices rise sharply, this directly increases firms' input costs, similar to an oil price shock. With sticky wages and prices, firms cannot immediately pass all costs to consumers or reduce wage costs, so their per-unit production costs rise. This causes SRAS to shift leftward from SRAS₁ to SRAS₂, not a movement along the curve. A movement along SRAS occurs when the price level changes due to demand shifts, but here the fundamental cost structure has changed. The leftward shift results in a higher price level and lower real GDP - classic stagflation. The distinction is crucial: cost changes shift SRAS, while price level changes from demand shifts cause movements along SRAS.

Question 13

1. A decrease in the price level and an increase in real GDP caused by a rightward shift of SRAS due to higher productivity.
2. An increase in the price level and a decrease in real GDP caused by a leftward shift of SRAS due to higher input prices. (correct answer)
3. An increase in the price level and an increase in real GDP caused by a rightward shift of SRAS due to higher input prices.
4. A decrease in the price level and a decrease in real GDP caused by a leftward shift of SRAS due to higher input prices.
5. No change in the price level and no change in real GDP because nominal wages adjust immediately to offset higher input costs.

Explanation: The short-run aggregate supply (SRAS) curve shows the relationship between the price level and real GDP when some input prices, particularly nominal wages, are sticky or slow to adjust. When global oil prices increase, this raises production costs for firms across the economy. Because nominal wages are sticky in the short run, firms face higher per-unit costs but cannot immediately reduce wages to compensate. The graph shows SRAS shifting leftward from SRAS₁ to SRAS₂, which means firms are willing to supply less output at each price level due to higher costs. This leftward shift causes the economy to move to a new short-run equilibrium with a higher price level and lower real GDP—a situation called stagflation. A key misconception is confusing supply shocks with demand shocks; remember that cost changes shift SRAS, while spending changes shift AD.

Question 14

1. A decrease in the price level and an increase in real GDP caused by a rightward shift of SRAS due to higher nominal wages.
2. An increase in the price level and a decrease in real GDP caused by a leftward shift of SRAS due to higher nominal wages. (correct answer)
3. A decrease in the price level and a decrease in real GDP caused by a leftward shift of SRAS due to higher nominal wages.
4. An increase in the price level and an increase in real GDP caused by a rightward shift of SRAS due to higher nominal wages.
5. No change in the price level and no change in real GDP because wages are fully flexible in the short run.

Explanation: The short-run aggregate supply (SRAS) curve shows how much output firms will produce at various price levels when some costs, especially wages, are sticky. When nominal wages increase through labor contracts, this directly raises firms' production costs per unit of output. Since product prices adjust more slowly than these wage increases in the short run, firms face a profit squeeze and reduce their quantity supplied at each price level. The graph illustrates this as a leftward shift from SRAS₁ to SRAS₂, meaning less output is produced at every price level. This shift creates a new equilibrium with a higher price level and lower real GDP—firms pass some costs to consumers through higher prices while reducing production. A common error is thinking wage increases shift SRAS right; remember that higher input costs always shift SRAS left because they make production more expensive.

Question 15

1. An increase in the price level and a decrease in real GDP caused by a leftward shift of SRAS from a negative supply shock. (correct answer)
2. A decrease in the price level and an increase in real GDP caused by a rightward shift of SRAS from a negative supply shock.
3. An increase in the price level and an increase in real GDP caused by a rightward shift of SRAS from higher input costs.
4. A decrease in the price level and a decrease in real GDP caused by a leftward shift of SRAS from higher productivity.
5. No change in the price level and no change in real GDP because the shock affects only aggregate demand.

Explanation: The short-run aggregate supply (SRAS) curve represents the total quantity of goods and services firms are willing to produce at different price levels when some input prices are fixed. A hurricane that destroys factories and disrupts shipping is a classic negative supply shock—it reduces the economy's productive capacity. With sticky wages and prices in the short run, firms cannot immediately adjust all their costs downward to compensate for the reduced productivity. The graph shows SRAS shifting leftward from SRAS₁ to SRAS₂, indicating that at any given price level, firms can now produce less output. This leftward shift results in a new equilibrium with a higher price level and lower real GDP. Students often mistakenly think natural disasters affect only demand, but the key insight is that anything affecting production costs or capacity shifts SRAS—use the rule that cost increases or productivity decreases shift SRAS left.

Question 16

1. The price level decreases and real GDP increases because SRAS shifts right from higher productivity. (correct answer)
2. The price level increases and real GDP decreases because SRAS shifts right from higher productivity.
3. The price level decreases and real GDP decreases because SRAS shifts left from higher productivity.
4. The price level increases and real GDP increases because SRAS shifts left from higher productivity.
5. The price level and real GDP are unchanged because productivity affects only the long run.

Explanation: The short-run aggregate supply (SRAS) curve shows the relationship between price levels and output when nominal wages are fixed. Improved worker training programs increase productivity—workers can produce more output with the same time and resources, effectively reducing per-unit production costs. With nominal wages remaining fixed in the short run, firms benefit from lower costs per unit of output produced. The graph illustrates SRAS shifting rightward from SRAS₁ to SRAS₂, indicating firms are willing to supply more at each price level due to improved efficiency. This rightward shift leads to a new equilibrium with a lower price level and higher real GDP—a win-win scenario of growth with disinflation. Students sometimes think all supply changes are negative; remember that productivity improvements are positive supply shocks that shift SRAS right, lowering prices while increasing output.

Question 17

1. Cost-push leftward shift with a higher price level and lower real GDP.
2. Productivity-driven rightward shift with a lower price level and higher real GDP. (correct answer)
3. Cost-push rightward shift with a higher price level and higher real GDP.
4. Productivity-driven leftward shift with a lower price level and lower real GDP.
5. No SRAS shift because productivity changes affect only aggregate demand.

Explanation: The short-run aggregate supply (SRAS) curve illustrates how much firms will produce at various price levels when nominal wages are sticky due to contracts. Technological improvements that raise output per worker represent a positive productivity shock—firms can produce more with the same inputs, effectively lowering per-unit production costs. Since nominal wages are slow to adjust upward due to multiyear contracts, firms enjoy temporarily higher profit margins and increase production. The graph shows SRAS shifting rightward from SRAS₁ to SRAS₂, indicating more output supplied at each price level. This is a productivity-driven rightward shift, resulting in a lower price level and higher real GDP—beneficial supply-side effects. Students often confuse all SRAS shifts with cost-push inflation; remember that productivity improvements shift SRAS right (good news), while cost increases shift SRAS left (bad news).

Question 18

1. Input prices rise, shifting SRAS left, raising the price level and lowering real GDP. (correct answer)
2. Input prices rise, shifting SRAS right, lowering the price level and raising real GDP.
3. Productivity rises, shifting SRAS left, raising the price level and lowering real GDP.
4. Nominal wages fall, shifting SRAS left, lowering the price level and lowering real GDP.
5. Aggregate demand falls, shifting SRAS left, raising the price level and lowering real GDP.

Explanation: The short-run aggregate supply (SRAS) curve represents firms' willingness to produce at different price levels when some costs are sticky. When the price of imported microchips rises sharply, this directly increases input prices for electronics firms—a key determinant of SRAS. With sticky prices in the short run, firms cannot immediately pass all costs to consumers or adjust other inputs, so their per-unit production costs rise. The graph shows SRAS shifting leftward from SRAS₁ to SRAS₂, meaning firms supply less output at each price level due to higher costs. This leftward shift creates a new equilibrium with a higher price level and lower real GDP—classic stagflation. A common error is thinking that only domestic factors affect SRAS; remember that any input price change, whether from domestic wages or imported materials, shifts SRAS—higher costs shift it left.

Question 19

1. SRAS shifts left, causing a higher price level and a lower level of real GDP in the short run. (correct answer)
2. SRAS shifts right, causing a higher price level and a higher level of real GDP in the short run.
3. SRAS shifts left, causing a lower price level and a higher level of real GDP in the short run.
4. SRAS shifts right, causing a lower price level and a lower level of real GDP in the short run.
5. There is a movement along SRAS because nominal wages are flexible in the short run.

Explanation: The SRAS curve represents the total quantity of goods and services firms will produce at different price levels when some input costs are fixed in the short run. When nominal wages increase through new labor contracts, this directly raises firms' per-unit labor costs. Since wages are sticky downward (meaning they don't easily fall once set), firms cannot quickly adjust these costs downward. Higher labor costs mean firms need higher prices to maintain profitability at each output level, shifting SRAS leftward from SRAS₁ to SRAS₂. This leftward shift results in a higher price level and lower real GDP in the short run, as firms produce less at any given price level. A common misconception is thinking wage changes cause movements along SRAS, but wage changes are a determinant that shifts the entire curve. Remember: higher input costs (including wages) shift SRAS left, leading to higher prices and lower output.

Question 20

1. SRAS shifts right; the price level falls and real GDP rises in the short run. (correct answer)
2. SRAS shifts left; the price level rises and real GDP falls in the short run.
3. SRAS shifts right; the price level rises and real GDP rises in the short run.
4. SRAS shifts left; the price level falls and real GDP rises in the short run.
5. SRAS does not shift; higher productivity only increases aggregate demand through investment.

Explanation: The short-run aggregate supply (SRAS) curve represents the relationship between the price level and real GDP when some input prices, particularly wages, are sticky. When technology improves and workers receive better training, labor productivity increases—meaning each worker can produce more output per hour. With nominal wages fixed by contracts in the short run, this higher productivity effectively lowers firms' per-unit labor costs (same wage, more output). This reduction in production costs shifts the SRAS curve rightward from SRAS1 to SRAS2, indicating firms are willing to supply more output at every price level. The result is an increase in real GDP as the economy's productive capacity expands, while the price level falls as lower costs allow firms to charge lower prices while maintaining profits. Students often confuse this with AD effects from investment spending, but the key is that productivity improvements directly reduce costs and shift SRAS. The transferable strategy remains: cost decreases shift SRAS right, cost increases shift SRAS left.