Answered: 7. Determinants of aggregate supply The…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7. Determinants of aggregate supply

The following graph shows a decrease in short-run aggregate supply (AS) in a hypothetical economy where the currency is the dollar. Specifically, the short-run aggregate supply curve shifts to the left from AS1AS1 to AS2AS2, causing the quantity of output supplied at a price level of 100 to fall from $200 billion to $150 billion.

The following table lists several determinants of short-run aggregate supply.

Complete the table by selecting the changes in each scenario necessary to decrease short-run aggregate supply.

Change Necessary to Decrease AS

Technology (declines/improves)

Human capital. (declines/improves)

Inflation expectations. (declines/improves)

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(2
CENGAGE MINDTAP
Homework (Ch 15)
billion to $150 billion.
PRICE LEVEL
200
175
150
125
100
75
50
25
0
0
50
100
h
1
150 200 250
QUANTITY OF OUTPUT
AS2
AS₁
300 350 400
The following table lists several determinants of short-run aggregate supply.
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Complete the table by selecting the changes in each scenario necessary to decrease short-run aggregate supply.
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