ECONOMICS
AGGREGATE DEMAND
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
firms expect the price level to increase.
|
|
|
the statutory retirement age is raised.
|
|
|
the price level increases.
|
|
|
oil prices decrease.
|
Detailed explanation-1: -Thus, when the expected price level rises, wages are higher, costs increase, and firms produce a smaller quantity of goods and services at any given actual price level. Thus, the short-run aggregate-supply curve shifts to the left.
Detailed explanation-2: -The aggregate supply curve shifts to the left as the price of key inputs rises, making a combination of lower output, higher unemployment, and higher inflation possible. When an economy experiences stagnant growth and high inflation at the same time it is referred to as stagflation.
Detailed explanation-3: -The Short-Run Aggregate Supply Curve (SRAS) The SRAS curve shows that as the price level increases and you move along the SRAS, the amount of real GDP that will be produced in an economy increases. An increase in the SRAS is shown as a shift to the right.
Detailed explanation-4: -Causes of Shift in Short-Run Aggregate Supply Some of the factors that would shift the SRAS curve include changes in commodity prices, nominal wages, productivity, and future expectations about inflation. In general, a shift to the right of the SRAS curve lowers the overall prices and raises the output produced.