Which of the following statements accurately describes w would happen as a result of this news? Check all that apply People would expect the price level to rise. The nominal wage that workers and firms agree to in their new labor contracts would be higher than it would be otherwise. The profitability of producing goods and services at any given price level would increase. The short-run aggregate-supply curve would shift to the left. If aggregate demand is held constant, the shift in the aggregate-supply curve will cause the price level to and the quantity of output produced to .
Which of the following statements accurately describes w would happen as a result of this news? Check all that apply People would expect the price level to rise. The nominal wage that workers and firms agree to in their new labor contracts would be higher than it would be otherwise. The profitability of producing goods and services at any given price level would increase. The short-run aggregate-supply curve would shift to the left. If aggregate demand is held constant, the shift in the aggregate-supply curve will cause the price level to and the quantity of output produced to .
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![### 12. Inflation
The economy begins in long-run equilibrium. Then one day, the president appoints a new Fed chair, who is well known for holding the view that inflation is not a major problem for an economy.
**Note:** You will not be graded on any changes you make to the following graph, but you may use it to help you understand the scenario described.
#### Explanation of the Graph:
The graph displays:
- The Long-Run Aggregate Supply (LRAS) curve which is a vertical line indicating that in the long run, the quantity of output supplied is independent of the price level.
- The Aggregate Demand (AD) curve is a downward sloping line indicating that as price levels decrease, the quantity of output demanded increases.
- The Aggregate Supply (AS) curve is an upward sloping line indicating that as price levels increase, the quantity of output supplied increases.
**Axes:**
- The vertical axis represents the Price Level.
- The horizontal axis represents the Quantity of Output.
#### Question:
Which of the following statements accurately describe what would happen as a result of this news? *(Check all that apply)*
- [ ] People would expect the price level to rise.
- [ ] The nominal wage that workers and firms agree to in their new labor contracts would be higher than it would be otherwise.
- [ ] The profitability of producing goods and services at any given price level would increase.
- [ ] The short-run aggregate-supply curve would shift to the left.
**Explanation:**
If aggregate demand is held constant, the shift in the aggregate-supply curve will cause the price level to [increase/decrease] and the quantity of output produced to [increase/decrease].
*(Fill in the blanks as appropriate based on your understanding of the scenario.)*](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F52bd3cfe-3c9b-40ce-8732-3b0b81ba9280%2F8cdaf8c3-8b7a-47dc-8842-9bb6f6844487%2Fekcvzk6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### 12. Inflation
The economy begins in long-run equilibrium. Then one day, the president appoints a new Fed chair, who is well known for holding the view that inflation is not a major problem for an economy.
**Note:** You will not be graded on any changes you make to the following graph, but you may use it to help you understand the scenario described.
#### Explanation of the Graph:
The graph displays:
- The Long-Run Aggregate Supply (LRAS) curve which is a vertical line indicating that in the long run, the quantity of output supplied is independent of the price level.
- The Aggregate Demand (AD) curve is a downward sloping line indicating that as price levels decrease, the quantity of output demanded increases.
- The Aggregate Supply (AS) curve is an upward sloping line indicating that as price levels increase, the quantity of output supplied increases.
**Axes:**
- The vertical axis represents the Price Level.
- The horizontal axis represents the Quantity of Output.
#### Question:
Which of the following statements accurately describe what would happen as a result of this news? *(Check all that apply)*
- [ ] People would expect the price level to rise.
- [ ] The nominal wage that workers and firms agree to in their new labor contracts would be higher than it would be otherwise.
- [ ] The profitability of producing goods and services at any given price level would increase.
- [ ] The short-run aggregate-supply curve would shift to the left.
**Explanation:**
If aggregate demand is held constant, the shift in the aggregate-supply curve will cause the price level to [increase/decrease] and the quantity of output produced to [increase/decrease].
*(Fill in the blanks as appropriate based on your understanding of the scenario.)*
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