Question

During the coronavirus pandemic, business shut-downs led to a decrease in short-run aggregate supply an increase...

During the coronavirus pandemic, business shut-downs led to

a decrease in short-run aggregate supply

an increase in aggregate demand

a decrease in potential output (long-run aggregate supply)

an increase in short-run aggregate supply

Two major items shift the short-run aggregate supply curve without shifting the long-run aggregate supply curve. They are

price expectations and technology

price expectations and economy-wide input costs

technology and physical capital

technology and economy-wide input costs

In the 1970s, there was a large and sustained increase in the price of oil, as a result,

both the short-run aggregate supply curve and the long-run aggregate supply shifted to the left

the aggregate demand curve shifted to the left

only the long-run aggregate supply shifted to the left

the short-run aggregate supply curve shifted to the left and long-run aggregate supply did not shift

From about some time in the 1950s until about 2010, prime age male labor force participation declined. This would tend to

shift only the short-run aggregate supply curve to the left

shift only the long-run aggregate supply curve to the left

shift both the short-run and the long-run aggregate supply curves to the left

shift both the short-run and the long-run aggregate supply curves to the right

Homework Answers

Answer #1

Ans 1: a decrease in short-run aggregate supply (because firms are shut down due to pandemic in the short run which decreased the aggregate supply).

Ans 2:

price expectations and economy-wide input costs

(They will shift the AS curve in the short run only).

Ans 3:

both the short-run aggregate supply curve and the long-run aggregate supply shifted to the left

(because it is sustained increased, which affects short run and long run both, and it caused an increase in the price of inputs, it means it will decrease the aggregate supply)

Ans 4: shift both the short-run and the long-run aggregate supply curves to the left (because it caused decrease in labor so decrease in aggregate supply. Also, 1950 to 2010 is a long run, so affected both, short run and long run.

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