ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Since rising wages increase business costs, prices increase; there is inflation. As higher prices cut into consumer purchasing power and net exports, the inflationary gap begins to close.

Detailed explanation-2: -Answer and Explanation: To shift the long-run aggregate supply curve to the right, you must increase the potential output of an economy assuming it is using all resources available.

Detailed explanation-3: -Changes in prices of factors of production shift the short-run aggregate supply curve. In addition, changes in the capital stock, the stock of natural resources, and the level of technology can also cause the short-run aggregate supply curve to shift.

Detailed explanation-4: -To correctly understand the aggregate supply curve, time is an essential factor. In the short run, rising prices (ceteris paribus) or higher demand causes an increase in aggregate supply. Producers do this by increasing the utilization of existing resources to meet a higher level of aggregate demand.