2.3 -AS

What is aggregate supply (AS)?

• Aggregate supply (AS) is the quantity of goods and services that producers are willing and able to supply at a given level of prices in a given time period.

• Aggregate supply (AS) is the total amount of money in circulation within an economy.

• Aggregate supply (AS) is the total demand for goods and services in an economy at a given time.

• Aggregate supply (AS) is the level of government spending in an economy during a specific period.

What is short run aggregate supply (SRAS)?

• Short run aggregate supply (SRAS) is the relationship between planned national output (GDP) and the general price level.

• Short run aggregate supply (SRAS) is the total value of goods and services produced in an economy over a long period of time.

• Short run aggregate supply (SRAS) is the relationship between the unemployment rate and the inflation rate.

• Short run aggregate supply (SRAS) is the total amount of money in circulation in an economy.

Which of the following is the main factor causing a shift in SRAS?

• Consumer demand

• Factor resource cost of supplying goods and services

• Government spending

• Exchange rates

According to the diagram, what happens when there is a rise in the price level?

• Contraction of aggregate supply

• Expansion of aggregate supply

• No change in aggregate supply

• Decrease in real GDP

When a business is not making full use of its available capacity, there are ______ factors of production including land, labour and capital.

• spare

• fixed

• expensive

• primary

Which of the following is NOT a cause of shifts in short run aggregate supply?

• Changes in resource (input) prices

• Business taxes, subsidies, regulations and imported costs

• Consumer preferences

• Energy costs such as oil, gas, and electricity

The short run AS curve is upward sloping because higher prices for goods and services make output more profitable, enabling businesses to expand their production by hiring extra labour and other resources.

• True

• False

Which of the following is NOT a factor that can cause a shift in short run aggregate supply (SRAS)?

• Changes in the scale and size of government subsidies to certain industries

• Cost of imported components

• Changes in consumer preferences

• Unexpected supply shocks

A shift from AS1 to AS2 in the short run aggregate supply curve is known as an ______ shift of the short run aggregate supply curve.

• inward

• outward

• vertical

• horizontal

Which of the following might cause an inward shift in the short run aggregate supply curve?

• A fall in raw material prices

• A rise in energy costs

• A decrease in unit labour costs

• A decline in business regulations