Group 10

What does the long-run aggregate supply (LRAS) curve represent?

• The relationship between output and price levels in the short run

• The economy's maximum sustainable level of output

• Temporary changes in production due to price level fluctuations

• The impact of sticky wages on supply decisions

What is the natural rate of output also known as?

• Real GDP

• Short-run equilibrium output

• Potential GDP or full-employment output

• Inflation-adjusted GDP

How does technological advancement affect the LRAS curve?

• It shifts the LRAS curve to the left

• It shifts the LRAS curve to the right

• It causes the LRAS curve to become horizontal

• It has no impact on the LRAS curve

Why are wages considered “sticky” in the short run?

• They adjust quickly to changes in the price level

• They are determined by long-term contracts and norms

• They depend entirely on short-run aggregate demand

• They always decrease with falling price levels

What happens when the actual price level falls below expectations under the sticky-wage theory?

• Firms increase production due to lower labor costs

• Real wages fall, encouraging firms to hire more workers

• Real wages rise, and firms reduce production

• The output level remains unchanged

In the long run, changes in the price level affect the natural rate of output.

• True

• • False

Discoveries of new natural resources generally cause the aggregate supply curve to shift to the right.

• True

• False

Stagflation refers to a period of rising output and declining price levels.

• True

• False

Which of the following factors can cause a shift in the Long-Run Aggregate Supply (LRAS) curve?

• A temporary increase in the price level

• Improved technology and productivity

• A reduction in aggregate demand

• An increase in menu costs

In the short run, sticky wages and prices cause the aggregate supply curve to be upward-sloping.

• True

• False