ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Change in consumer spending
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Government spending
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Change in interest rates
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Cost of production change
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Detailed explanation-1: -An increase in wages will shift the long-run aggregate supply curve to the left.
Detailed explanation-2: -The aggregate supply curve shifts to the right as productivity increases or the price of key inputs falls, making a combination of lower inflation, higher output, and lower unemployment possible.
Detailed explanation-3: -Higher prices for inputs that are widely used across the entire economy, such as labor or energy, can have a macroeconomic impact on aggregate supply. Increases in the price of such inputs represent a negative supply shock, shifting the SRAS curve to shift to the left.
Detailed explanation-4: -The supply curve can shift based on several factors including changes in production costs (e.g., raw materials and labor costs), technological progress, the level of competition and number of sellers/producers, and the regulatory & tax environment.
Detailed explanation-5: -An increase in input prices will cause the aggregate supply curve to shift rightward.