aggregate supply

Which of the following best describes why the short-run aggregate supply (SRAS) curve is upward sloping?

• nominal wages adjust quickly to changes in the price level.

• prices and nominal wages are slow to adjust to changes in the price level.

• the real value of assets increases as the price level decreases.

Answer explanation

Sticky-Wage Theory

Sticky-Price Theory

Which of the following best describes a tradeoff that a country will experience when it moves from point x to point Y ?

• An increase in economic growth, but an increase in inflation

• An increase in unemployment, but an increase in inflation

• A decrease in the unemployment rate, but an increase in inflation

Answer explanation

When a country moves to the right along their SRAS curve, as shown here, inflation increases and output increases. An increase in output will lead to a decrease in unemployment. Therefore, the SRAS curve also illustrates that there is a short-run tradeoff between inflation and unemployment.

Aggregate supply is defined as the total amount of goods and services that are _____.

• produced and supplied by an economy

• demanded by consumers

• exported to other countries

.You're so excited to attain your first teaching position. During new employee orientation, your pay scale suggests that annual salary is fixed, and will not increase until after the completion of the second year. What type of wage structure is this an example of?

• Fixed income

• Sticky wages

• Public service wages

A decrease in the quantity of labor available shifts the aggregate supply to the :

• left

• right

• doesn't shift.

An increase in the productivity of physical capital or human capital shifts the aggregate supply curve to the?

• right

• doesn't shift

• left

An increase in the expected price level reduces the quantity of goods and services supplied and shifts the short run aggregate supply curve to the?

• left

• right

• doesn't shift.

If firms want to produce more, they will need to hire more workers so the unemployment rate ?

• increase

• decrease

• doesn't change.

An increase in natural resources will shift the SRAS to the?

• left

• right

• doesn't shift

A decrease in the capital stock will shift the SRAS to the ?

• right

• left

• middle

• downward