What variables cause the short-run aggregate supply curve to shift? For each variable, identify whether an increase in that variable will cause the short-run aggregate supply curve to shift to the right or to the left
What will be an ideal response?
The variables that will cause the short-run aggregate supply to shift are: the size of the labor force, the size of the capital stock, productivity, the expected future price level, workers and firms adjusting to having previously underestimated the price level, and the expected price of an important natural resource. Increases in the labor force, the capital stock, or productivity will cause the short-run aggregate supply curve to shift to the right. Increases in the expected future price level, increases in the price of an important natural resource, and workers and firms adjusting to having previously underestimated the price level will cause the short-run aggregate supply curve to shift to the left.
You might also like to view...
The difficulty of ascertaining the right second-best trade policy to follow
A) reinforces support for the third-best policy approach. B) reinforces support for increasing research capabilities of government agencies. C) reinforces support for abandoning trade policy as an option. D) reinforces support for free-trade options. E) reinforced support for the domestic market failure argument.
Assume the production of a good gives rise to external benefits. The government may increase efficiency by
A) subsidizing consumption of the good. B) requiring all producers of the good to be licensed. C) taxing production of the good. D) imposing taxes on the good.
If the demand for a product is unit-elastic, a 25 percent increase in its price will result in:
a. a 25 percent change in total revenue. b. no change in quantity demanded. c. a 1 percent increase in quantity demanded. d. a 25 percent decrease in quantity demanded. e. a 100 percent change in quantity demanded.
Household saving is the defined as consumption minus disposable income
a. True b. False