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A- Anything that causes the cost of production to temporarily decrease will cause (the short-run -...

A- Anything that causes the cost of production to temporarily decrease will cause (the short-run - the long-run – neither - both) aggregate supply curve(s) to (shift left - shift right - remain constant). Ceteris paribus, this will temporarily (decrease - increase) output and (decrease - increase) the price level.

B- A decrease in foreign investment in a country will (decrease - increase - not change) the country's capital stock and shift the LRAS to the (left – right)

C- Suppose there is a decrease in government spending. In the short run output (decreases - increases - does not change) and in the long run output (decreases - increases - does not change)

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Answer #1

A) anything that causes the cost of production to temporarily decrease will cause THE SHORT RUN aggregate supply to SHIFT RIGHT. Ceteris Paribus this will temporarily INCREASE output and DECREASE the price level.

B) a decrease in foreign investment in a country will DECREASE the country's capital stock and shift the LRAS to the LEFT.

C) suppose there is a decrease in government spending. In the short run output DECREASES and in the long run output DOES NOT CHANGE.

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