Aggregate Supply- Macro Topics 3.3 and 3.4

Jacob Clifford explains aggregate supply, focusing on short-run and long-run curves. He discusses factors that shift the supply curve, such as resource prices, government actions, and productivity changes. The video highlights the difference between short-run and long-run effects on supply, emphasizing the importance of understanding these concepts for exams. Practice scenarios are provided to reinforce learning.

What is the primary difference between short-run and long-run aggregate supply curves?

• Both are vertical

• Both are upward sloping

• Short-run is upward sloping, long-run is vertical

• Short-run is vertical, long-run is upward sloping

Which of the following can cause a shift in the short-run aggregate supply curve?

• Change in government spending

• Change in resource prices

• Change in consumer preferences

• Change in foreign exchange rates

What happens to the short-run aggregate supply curve if there is an increase in productivity?

• It becomes vertical

• It remains unchanged

• It shifts to the right

• It shifts to the left

In the long-run, what does the aggregate supply curve represent?

• Fluctuating sustainable capacity

• Minimum sustainable capacity

• Average sustainable capacity

• Maximum sustainable capacity

How does an increase in expected future prices affect the short-run aggregate supply?

• It becomes horizontal

• It shifts to the right

• It becomes vertical

• It shifts to the left

What is the effect on long-run aggregate supply when nominal wages increase?

• It becomes horizontal

• It shifts to the right

• It shifts to the left

• It remains unchanged

Which scenario would cause a decrease in short-run aggregate supply?

• Improvement in technology

• Power outages

• Increase in physical capital

• Decrease in corporate taxes