What variables cause the short-run aggregate supply curve to shift? For each variable, identify whether an increase in that variable will cause the short-run aggregate supply curve to shift to the right or to the left
What will be an ideal response?
The variables that will cause the short-run aggregate supply to shift are: the size of the labor force, the size of the capital stock, productivity, the expected future price level, workers and firms adjusting to having previously underestimated the price level, and the expected price of an important natural resource. Increases in the labor force, the capital stock, or productivity will cause the short-run aggregate supply curve to shift to the right. Increases in the expected future price level, increases in the price of an important natural resource, and workers and firms adjusting to having previously underestimated the price level will cause the short-run aggregate supply curve to shift to the left.
You might also like to view...
Refer to Table 20-14. The real average hourly earnings for 1965 in 1982-1984 dollars equal
A) $1.28. B) $6.49. C) $8.28. D) $15.45.
For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $11 and a marginal cost of $10 . It follows that the
a. production of the 100th unit of output increases the firm's profit by $1. b. production of the 100th unit of output increases the firm's average total cost by $1. c. firm's profit-maximizing level of output is less than 100 units. d. production of the 101st unit of output must increase the firm's profit by more than $1.