Author Question: List three changes that lead to a shift of the aggregate supply curve. Discuss why each change ... (Read 106 times)

armygirl

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List three changes that lead to a shift of the aggregate supply curve. Discuss why each change shifts the aggregate supply curve and in which direction the curve shifts.
 
  What will be an ideal response?

Question 2

Refer to the figure above. Which of the following statements are true in this case?
 
  A) P1 is the socially optimal price for Good X.
  B) P2 is the price of Good X in a free market.
  C) Q2 is the efficient level of output of Good X.
  D) Q2 is the quantity supplied of Good X in a free market.



HandsomeMarc

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Answer to Question 1

A change in potential GDP, a change in the money wage rate, and a change in the money prices of other resources shift the aggregate supply curve. If potential GDP increases (decreases) or the money wage rate decreases (increases) or the money prices of other resources decrease (increase), aggregate supply increases (decreases) and the AS curve shifts rightward (leftward).

Answer to Question 2

C



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