Question

1. The aggregate supply curve shows the relationship between the aggregate price level and the aggregate:

output supplied.

money supply.

unemployment rate.

employment.

2. The short-run aggregate supply curve shows:

the price level at which real output will be consumed.

the price level at which real output will be in equilibrium.

the positive relationship between the aggregate price level and aggregate output supplied.

the negative relationship between the aggregate price level and aggregate output supplied.

3. A change in _____ would shift in the short-run aggregate supply curve.

the quantity of real output supplied

the price level

commodity prices

aggregate demand

4. The short-run aggregate supply curve will shift to the:

right if commodity prices increase.

left if productivity increases.

left if nominal wages increase.

right if government spending increases.

Answer 1

Ans. 1. a) output supplied

The aggregate supply curve shows the relationship between the real GDP( output supplied ) at a different aggregate price level in the economy.

Ans.2. C) the positive relationship between the aggregate price level and aggregate output supplied

In the short- run, the aggregate supply curve is upward sloping that shows the positive relationship between the aggregate price level and aggregate output supplied. The short-run aggregate supply curve is upward sloping because in the short run wages are not changed.

Ans.3 c) Commodity prices

When commodity price, nominal wages and productivity change and all lead to a change in producer's profit and short-run aggregate supply curve shifts.

Ans.4. c) left if nominal wages increase

The short-run aggregate supply curve shifts right when

1) commodity prices fall

2) Nominal wages fall

3) workers become more productive

The short-run aggregate supply curve shifts left when

1) commodity prices rise

2) Nominal wages rise

3) workers become less productive