Increase or Decrease? ### Graph ExplanationThe graph illustrates the short-run aggregate supply (SRAS) curves in relation to price level and quantity of output. - **SRAS1 and SRAS2**: These are two short-run aggregate supply curves. SRAS1 is the initial curve, while SRAS2 shows a rightward shift indicating an increase in the aggregate supply.- **Axes**: - The vertical axis represents the "Price Level." - The horizontal axis indicates the "Quantity of Output."- **Highlights**: - The graph includes gridlines and points of intersection, which demonstrate changes in equilibrium as SRAS shifts from SRAS1 to SRAS2.### Table ExplanationThe table below the graph outlines several determinants that affect short-run aggregate supply (SRAS). It asks users to identify necessary changes in each determinant to boost SRAS.#### Determinants and Changes Needed to Increase SRAS1. **Resource Prices** - Adjustment options: Users should specify whether a decrease in resource prices (e.g., labor, materials) is necessary.2. **Quantity of Resources Available** - Adjustment options: Users should indicate whether an increase in the availability of resources (e.g., labor, raw materials) is required.3. **Efficiency-Reducing Business Regulations** - Adjustment options: Users should determine if reducing regulations that hinder business efficiency will help increase SRAS.This information aids in understanding the dynamics of supply shifts and the factors influencing such changes in the short run. ## 2. Determinants of Aggregate SupplyThe following graph demonstrates an increase in short-run aggregate supply in a hypothetical economy where the currency is the dollar. Specifically, the aggregate supply shifts to the right from SRAS1 to SRAS2, causing the quantity of output supplied at a price level of 100 to increase from $200 billion to $250 billion.### Graph Explanation:- **Axes**: - The vertical axis represents the **Price Level**, ranging from 0 to 200. - The horizontal axis represents the **Quantity of Output**, ranging from 0 to 400 billion dollars.- **Lines**: - **SRAS1**: Initial Short-Run Aggregate Supply curve, represented by a line with a positive slope. - **SRAS2**: New Short-Run Aggregate Supply curve after a shift, also with a positive slope and positioned to the right of SRAS1.- **Shift**: - The shift of the aggregate supply curve from SRAS1 to SRAS2 indicates an increase in the quantity of output supplied at constant price levels.- **Illustrated Movement**: - At a price level of 100, the movement is shown by dashed lines indicating the increase from $200 billion to $250 billion in output as the supply curve shifts right.The following table lists several determinants of short-run aggregate supply.

Aggregate supply is used along with the aggregate demand curve to depict the macroeconomic…

The following table lists several determinants of short-run aggregate supply. Fill in the table by indicating the changes in the determinants necessary to increase short-run aggregate supply. Change Needed to Increase SRAS Resource Prices Quantity of Resources Available Efficiency-Reducing Business Regulations

The following table lists several determinants of short-run aggregate supply. Fill in the table by indicating the changes in the determinants necessary to increase short-run aggregate supply. Change Needed to Increase SRAS Resource Prices Quantity of Resources Available Efficiency-Reducing Business Regulations

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Increase or Decrease?

### Graph Explanation

The graph illustrates the short-run aggregate supply (SRAS) curves in relation to price level and quantity of output.

- **SRAS1 and SRAS2**: These are two short-run aggregate supply curves. SRAS1 is the initial curve, while SRAS2 shows a rightward shift indicating an increase in the aggregate supply.
- **Axes**:
- The vertical axis represents the "Price Level."
- The horizontal axis indicates the "Quantity of Output."
- **Highlights**:
- The graph includes gridlines and points of intersection, which demonstrate changes in equilibrium as SRAS shifts from SRAS1 to SRAS2.

### Table Explanation

The table below the graph outlines several determinants that affect short-run aggregate supply (SRAS). It asks users to identify necessary changes in each determinant to boost SRAS.

#### Determinants and Changes Needed to Increase SRAS

1. **Resource Prices**
- Adjustment options: Users should specify whether a decrease in resource prices (e.g., labor, materials) is necessary.

2. **Quantity of Resources Available**
- Adjustment options: Users should indicate whether an increase in the availability of resources (e.g., labor, raw materials) is required.

3. **Efficiency-Reducing Business Regulations**
- Adjustment options: Users should determine if reducing regulations that hinder business efficiency will help increase SRAS.

This information aids in understanding the dynamics of supply shifts and the factors influencing such changes in the short run.

## 2. Determinants of Aggregate Supply

The following graph demonstrates an increase in short-run aggregate supply in a hypothetical economy where the currency is the dollar. Specifically, the aggregate supply shifts to the right from SRAS1 to SRAS2, causing the quantity of output supplied at a price level of 100 to increase from $200 billion to $250 billion.

### Graph Explanation:
- **Axes**:
- The vertical axis represents the **Price Level**, ranging from 0 to 200.
- The horizontal axis represents the **Quantity of Output**, ranging from 0 to 400 billion dollars.

- **Lines**:
- **SRAS1**: Initial Short-Run Aggregate Supply curve, represented by a line with a positive slope.
- **SRAS2**: New Short-Run Aggregate Supply curve after a shift, also with a positive slope and positioned to the right of SRAS1.

- **Shift**:
- The shift of the aggregate supply curve from SRAS1 to SRAS2 indicates an increase in the quantity of output supplied at constant price levels.

- **Illustrated Movement**:
- At a price level of 100, the movement is shown by dashed lines indicating the increase from $200 billion to $250 billion in output as the supply curve shifts right.

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

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