ECONOMICS
AGGREGATE SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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demand curve will shift leftward.
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supply curve will shift rightward.
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supply curve will shift leftward.
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expenditures curve will shift downward.
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Detailed explanation-1: -Nominal wages increase, and the short-run aggregate supply curve shifts right until potential output is greater than actual output.
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: -Shifts in the short run aggregate supply curve are caused by changes in inflationary expectations; changes in worker force and capital stock availability; changes in government action (not the same as government expenditure); changes in productivity; and supply shocks.
Detailed explanation-4: -When wage rates rise the short-run aggregate supply curve shifts to the right. There is a rise in labor productivity in the economy.