Which of the following shifts the short-run, but not the long-run, aggregate supply right?

56. Which of the following shifts the short-run, but not the long-run, aggregate supply right?

A. a decrease in the price level B. a decrease in the expected price level C. a decrease in the capital stock D. a decrease in the savings rate

57. Which of the following would cause prices and real GDP to rise in the short run?

A. Short-run aggregate supply shifts right. B. Short-run aggregate supply shifts left. C. Aggregate demand shifts right. D. Aggregate demand shifts left.

Expert Solution

56. A decrease in the expected price level means suppliers believe they have to sell products at a much lower rate in future period. So, they will supply more today, causing the SRAS to shift Rightward.

Note that, a decrease in the actual price level doesn't shift the SRAS. It only causes a movement along the curve. The LRAS curve is not affected by a change in the expected price level or actual price level.

Answer: B

57. A rightward shift of the AD curve, everything else is unchanged, will cause an increase in the both equilibrium price level and real GDP in the short run.

Answer: option C

Rahul Sunny answered 2 years ago

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