📚 Learning Guide
Economic Recovery and Supply Shifts
easy

What is likely to occur when there is a positive supply shift in an economy during its recovery phase?

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Learning Path
Learning Path

Question & Answer
1
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2
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3
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Choose the Best Answer

A

Prices decrease and output increases

B

Prices increase and output decreases

C

Prices remain constant while output decreases

D

Prices decrease while output remains constant

Understanding the Answer

Let's break down why this is correct

Answer

When there is a positive supply shift in an economy during its recovery phase, it means that producers can create more goods and services at lower costs. This increase in supply often leads to lower prices for consumers, making products more affordable. For example, if a factory improves its technology and can produce cars more efficiently, it might lower the price of cars for buyers. As prices drop, more people are likely to buy these cars, which can help the economy grow even faster. Overall, a positive supply shift helps to stimulate demand, create jobs, and support a stronger economic recovery.

Detailed Explanation

When supply increases, it usually leads to lower prices. Other options are incorrect because This option suggests that prices go up when supply increases; This option says output decreases while prices stay the same.

Key Concepts

Supply Shift
Topic

Economic Recovery and Supply Shifts

Difficulty

easy level question

Cognitive Level

understand

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