20. Which one of the following aggregate (SRAS) supply curve to the left? a. a r
ID: 1125206 • Letter: 2
Question
20. Which one of the following aggregate (SRAS) supply curve to the left? a. a reduction in business taxes would increase per unit production cost and therefore shift the short-run production bottlenecks occurring when producers near full plant capacity a sudden increase in the price of resources deregulation of industry b. e. d. 21. Suppose that nominal wages suddenly fall and productivity rises in a particular economy. Other things equal, the aggregate: a. demand curve will shift leftward. b. supply curve (SRAS) will shift rightward. c. supply curve (SRAS) will shift leftward. c. expenditures curve will shift downward. 22. Given an upsloping short- run aggregate supply (SRAS) curve, a rightward shift of the AD curve will a. cause cost push inflation. b. increase real output but not the price level. c. increase the price level but not real output d. increase both the price level and real output. f aggregate demand (AD) increases and short-run aggregate supply (SRAS) decreases, the price level a. will decrease, but real output may either increase or decrease. b. will increase, but real output may either increase or decrease. c. and real output will both increase. d. and real output will both decrease. 24. Graphically, demand-pull inflation is shown as a: rightward shift of the AD curve along an upsloping SRAS curve. b. a. leftward shift of the SRAS curve along a downsloping AD curve. leftward shift of the SRAS curve along an upsloping AD curve. c. d. rightward shift of the AD curve along a downsloping SRAS curve. Graphically, cost-push inflation is shown as a: a. leftward shift of the AD curve. b. rightward shift of the SRAS curve c. leftward shift of the SRAS curve. d. 25. rightward shift of the AD curve. The economy's long-run aggregate supply (LRAS) curve assumes that wages and other resource prices: a. eventually rise and fall to match upward or downward changes in the price level. b. are flexible upward but inflexible downward. c. rise and fall more rapidly than the price level. d. are relatively inflexible both upward and downward. 26. 27. An inflationary gap is the amount by which: a. equilibrium GDP falls short of the full-employment GDP. aggregate expenditures exceed any given level of GDP. saving exceeds investment at the full-employment GDP equilibrium GDP exceeds the full-employment level of GDP. b. c. d.Explanation / Answer
Answer 20. c) A sudden increase in the price of resources.
In the short run when prices of resources/inputs increases the cost of production increases, this will shift the supply curve to the left as short term supply will decrease.
Answer 21. b) aggregate supply curve will shift rightward
When nominal wages fall and productivity increases, more will be produced at lessre cost, cost of production will decrease and profits will increase. Thus aggregate supply curve wil shift rightward.
Answer 22. d) Increase both price level and real output.
In case of rightward shift of demand curve, increase in demand both the prices and output increases in short run.
Answer 23. b) prices will increase, but real output may either increase or decrease.
In short run if aggregate demand increases and supply dcreases the prices will definitely rise whereas the real output may increase or decrease dpending upon the increase in price.
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