Aggregate supply definitions The short-run aggregate supply curve shows: Which o
ID: 1104105 • Letter: A
Question
Aggregate supply definitions
The short-run aggregate supply curve shows:
Which of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that apply.
The term natural rate of unemployment refers to:
Changes in output in an economy as the price level changes, holding all other determinants of real GDP constant How firms respond to changes in interest rates What happens to output in an economy when the government spends more money The relationship between the price level and aggregate expenditureExplanation / Answer
(1) (A)
Short run aggregate supply shows the relationship between price level and aggregate output (supply) produced by all firms in the economy.
(2) The following are assumed unchanged:
- Technology
- Institutions
- Position of aggregate demand curve
(3) (D)
When economy operates at full employment level, producing real GDP equal to potential GDP, the sum of frictional and structural unemployment existing at such state is called natural rate of unemployment.
(4)
(a) Period of time when some input prices and wages are fixed - Short run
(b) Period of time long enough for all input prices and wages to be negotiated - Long run