Answer:
4. The real domestic output will decrease and the price level will rise.
Explanation:
Aggregate supply is the total output or the total supply of goods and services produced within an economy in a specific time period at a given price.
When the short-run Supply curve shifts to the right the aggregate output in the economy increases whereas the price level decreases. This happens as a result of a fall in the input prices e.g. taxes, subsidies, wages, and price of raw materials.
When the short-run Supply curve shifts to the left the aggregate output in the economy decreases whereas the price level increases. This happens as a result of a rise in the input prices e.g. taxes, subsidies, wages, and price of raw materials.
