ECONOMICS
AGGREGATE SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Shift aggregate supply outwards at each price
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Shift aggregate supply inwards at each price
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Shift aggregate demand outwards at each price
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Shift aggregate demand inwards at each price
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Detailed explanation-1: -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-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. If labor productivity rises, the potential output of an economy increases since you can produce more output per unit of labor.
Detailed explanation-3: -It is possible for the short-run supply curve to shift outward as a result of an increase in output and real GDP at a given price. As a result, the short-run aggregate supply curve shows the correlation between the price level and output.
Detailed explanation-4: -Here, the key lesson is that a shift of the aggregate demand curve to the right leads to a greater real GDP and to upward pressure on the price level. Conversely, a shift of aggregate demand to the left leads to a lower real GDP and a lower price level.