The Aggregate supply Curve: is irrelevant for determining macroeconomic equilibr
ID: 1204286 • Letter: T
Question
The Aggregate supply Curve: is irrelevant for determining macroeconomic equilibrium has a negative slope shifts with changes in consumer spending, investment, government spending, and net exports shows the various levels of output produced in the economy at different average price levels. The short-run AS curve is drawn under the assumption that nominal wages are increasing average price levels are fixed interest rates are decreasing the costs of the factors of production are constant The short-run AS curve shifts to the left when: Production technology increases equipment prices rise people expect lower inflation rates wages are reducedExplanation / Answer
21. Option D is correct.
Aggregate supply curve is the positive relation showing the price of goods and the quantity sold. Its an upward sloping curve. Higher the price, more goods would be sold by the sellers and vice-versa for lower price.
22. Option D is correct.
This is so because, the supply curve is affected by the changes in the cost of factors of production. So to analyse only the supply curve, the factor costs are kept constant.
23. Option B is correct.
This is so because, equipment is an input to the product process. A rise in its price would make the cost of production higher and hence the sellers would reduce their supply of goods and services by supplying less and the short run AS supply would shift to left.
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