3.3 Short Run Aggregate Supply - AP Macro

The short run aggregate supply curve will:

• shift to the right if commodity prices increase.

•   shift to the left if there is an increase in productivity.

• shift to the left if nominal wages increase.

•   shift to the right if government spending increases.

The short-run aggregate supply curve may shift to the right if:

• productivity increases

•   nominal wages increase.

•   personal income taxes decrease.

•   commodity prices rise.

If nominal wages fall, then short-run aggregate:

• supply shifts to the right.

•   supply shifts to the left.

•   demand shifts to the right.

•   demand shifts to the left.

(Figure: Aggregate Supply Movements) Using the accompanying figure we can safely conclude that:

•   an increase in the price level is responsible for pushing the SRAS curve to the right.

•   a decrease in the price level is responsible for pushing the SRAS curve to the right.

• that there has been an increase in the short-run aggregate supply.

•   that there has been a decrease in the short-run aggregate supply.

Which of the following would likely cause the short-run aggregate supply curve to shift to the left?

•   a decrease in consumer spending

•   a decrease in the price of imported oil

• an increase in the price of imported oil

•   an increase in consumer spending

The short-run aggregate supply curve is positively sloped because:

•   wages and other costs of production respond immediately to changes in prices.

•   profit is lower when prices increase, so output decreases.

•   workers are willing to work for lower wages rather than be laid off.

• higher prices lead to higher profit and higher output.

The long-run aggregate supply curve is vertical because in the long run:

•   technological progress outpaces raises in nominal wages.

•   all factors of production increase.

•   the price of labor is flexible, while the price of physical capital is fixed.

• all prices are flexible.

Define the short-run aggregate supply curve (SRAS)

• The relationship between price level and real GDP in an economy

• The relationship between price and quantity in an economy

• Not the Long-Run Aggregate Supply Curve

• How much we supply before getting feedback

Why is the slope of the SRAS positively sloped?

• Sticky wages and prices

• the shadow market gets involved as prices go up

• Externalities

• greed

What causes the SRAS to shift? (select all)

• Changes in per unit cost of production

• Changes in productivity

• Changes in Expected Inflation

• Changes in price levels