Question

1. Suppose there is a decrease in the availability of an important major resource, such as oil. Which shift would most likely occur?

        a.    The aggregate supply would shift right.

        b.    The aggregate supply would shift left.

        c.     The aggregate demand would shift right.

        d.    The aggregate demand would shift left.

2. How does the aggregate demand and aggregate supply model reflect a rise in wage rates?

        a.    The short-run aggregate-supply curve shifts to the right.

        b.    The short-run aggregate-supply curve shifts to the left.

        c.     The aggregate-demand curve shifts to the right.

        d.    The aggregate-demand curve shifts to the left.

3. Which of the following would cause stagflation?

        a.    aggregate demand shifts right

        b.    aggregate demand shifts left

        c.     aggregate supply shifts right

        d.    aggregate supply shifts left

Answer 1

a) It will shift the SRAS to the left and the new equilibrium will be at a lower output and higher price in the market.

the answer is "B".

b) "B"

this will also increase the cost of production and shift the supply curve to the left.

c) "B"

Aggregate supply curve shifting to the left is stagflation.