ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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an economy-wide decrease in commodity prices
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an increase in nominal wages
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a decrease in productivity
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a decrease in government purchases of goods and services
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Detailed explanation-1: -A higher level of productivity shifts the SRAS curve to the right because with improved productivity, firms can produce a greater quantity of output at every price level.
Detailed explanation-2: -Which of the following will shift the short-run aggregate supply curve to the right? An economy-wide decrease in commodity prices. The short-run aggregate supply curve may shift to the right if: productivity increases.
Detailed explanation-3: -What causes shifts in SRAS? When the price level changes and firms produce more in response to that, we move along the SRAS curve. But, any change that makes production different at every possible price level will shift the SRAS curve. Events like these are called “shocks” because they aren’t anticipated.
Detailed explanation-4: -If all workers and firms adjust to the fact that the price level is higher than they had expected it to be, the short-run aggregate supply curve will shift to the left. If oil prices rise unexpectedly, the short-run aggregate supply curve will shift to the left.
Detailed explanation-5: -The correct answer is A. The business grows its investment in factories, tools, techniques, and other factors, which helps in larger aggregate supply in the market as it creates a larger quantity of production at a given price-level. This causes the short-run and long-run supply curve to shifts rightwards.