ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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An increase in the cost of labor
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Firms anticipate lower inflation in the future
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A decrease in business taxes
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A decrease in the price of capital
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An increase in consumption
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Detailed explanation-1: -Answer and Explanation: A decrease in the price level will decrease the short-run aggregate supply only.
Detailed explanation-2: -Answer and Explanation: The correct option is b. A decrease in the price of capital.
Detailed explanation-3: -As long as the short-run aggregate supply curve slopes upward, the short-run effect of an increase in the money supply is an increase in both real output and the price level.
Detailed explanation-4: -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. If labor productivity rises, the potential output of an economy increases since you can produce more output per unit of labor.