Which of the following is true?

a. a shift left of the long-run aggregate supply and potential GDP will also shift the short-run aggregate supply curve left as well.

b. a shift right of the long-run aggregate supply and potential GDP will also shift the short-run aggregate supply curve right as well.

c. a change the money wage and other resource prices does not shift the long-run aggregate supply.

d. all of the answers are true.

Question

Business

Francis

2 February, 05:15

Which of the following is true?

a. a shift left of the long-run aggregate supply and potential GDP will also shift the short-run aggregate supply curve left as well.

b. a shift right of the long-run aggregate supply and potential GDP will also shift the short-run aggregate supply curve right as well.

c. a change the money wage and other resource prices does not shift the long-run aggregate supply.

d. all of the answers are true.

+3

Answers (1)

Know the Answer?

Azul David · Answer 1

the correct option is c) change in the money wage and other resource prices does not shift the long run aggregate supply

Explanation:

First of all aggregate supply can be defined as the sum total of all the goods and services that are supplied in the economy during a defined period of time.

In the given question the option C is right because it is assumed that in the case of long run aggregate supply, the supply curve tends to remain static because any kind of change in the aggregate demand causes only temporary changes in the total output of the economy and the slope of the curve remains vertical. It is also assumed that the economy is being used at optimal as only factors like labor, capital, and technology can bring in aggregate supply.

Options a) and b) can't be true because if the supply curve is gonna shift, it is first going to shift in short run aggregate supply then long run aggregate supply, not the other way around.