Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? Price Level 150 140 130 120 110 100 90 80 70 60 0 5 15 10 Real GDP ($ billion) -AS-AD-AS2 20 O A general increase in energy and labor cost for businesses. A federal government increase in spending. 25 4
Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? Price Level 150 140 130 120 110 100 90 80 70 60 0 5 15 10 Real GDP ($ billion) -AS-AD-AS2 20 O A general increase in energy and labor cost for businesses. A federal government increase in spending. 25 4
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:**Title: Understanding Shifts in the Aggregate Supply Curve**
**Question:**
Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below?
**Graph Explanation:**
The graph presents three curves plotted on axes where the x-axis represents Real GDP ($ billion) and the y-axis represents the Price Level.
- The **AS (Aggregate Supply)** curve is shown in blue and is upward sloping, indicating a direct relationship between the price level and real GDP.
- The **AD (Aggregate Demand)** curve is shown in orange and is downward sloping, showing an inverse relationship between the price level and real GDP.
- The **AS2** curve, also in blue, is to the right of the original AS curve, indicating an increase in aggregate supply.
The intersection of these curves demonstrates shifts and changes in the equilibrium between price level and GDP.
**Options:**
- O A general increase in energy and labor cost for businesses.
- O A federal government increase in spending.
This educational piece helps illustrating how shifts in the Aggregate Supply curve can be influenced by various macroeconomic factors.
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