In the above figure, illustrate the effect on the AS curve from ...

[FButt]

In the above figure, illustrate the effect on the AS curve from an increase in the money price of a key resource such as oil.
 
  What will be an ideal response?

Question 2

The aggregate expenditure model predicts a business cycle expansion occurs when
 
  A) the aggregate planned expenditure curve shifts downward.
  B) aggregate supply increases.
  C) induced expenditure decreases.
  D) autonomous expenditure increases.
  E) potential GDP increases.

[jonathanballen97]

Answer to Question 1

An increase in the money price of a key resource such as oil squeezes firms' profits and decreases aggregate supply. As illustrated in the figure above, the AS curve shifts leftward, in the figure from AS1 to AS2.

Answer to Question 2

D

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Gracias!

[xiaomengxian]

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