Question

The AS ( Aggregate Supply) curve slopes upwards because? a- Wages are sticky b- as the...

The AS ( Aggregate Supply) curve slopes upwards because?

a- Wages are sticky

b- as the price level rises the fed raises the interest rate

Homework Answers

Answer #1

Wages are sticky

Because of the fact that nominal wages are fixed in advance due to contractual terms of labour, whenever there is an increase in the general price level nominal wages remain unchanged and this causes real wage rate to decline. Firms hire more labour and produce more when real wages are produced and they supply more units. this implies that the aggregate quantity of goods and services supply increases when there is an increase in the price level. Due to this reason aggregate supply curve slopes upward

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Question 11 pts The aggregate supply curve is vertical in the short run. slopes downward because...
Question 11 pts The aggregate supply curve is vertical in the short run. slopes downward because of sticky wages and prices. is vertical in the long run. slopes downward largely because of the trade effect and wealth effect. Flag this Question Question 21 pts The aggregate supply curve is vertical in the short run. slopes downward because of sticky wages and prices. is vertical in the long run. slopes downward largely because of the trade effect and wealth effect. Flag...
QUESTION 32 Wages tend to be sticky a. because of contracts, social norms, and notions of...
QUESTION 32 Wages tend to be sticky a. because of contracts, social norms, and notions of fairness. b. because of contracts, but not social norms or notions of fairness. c. because of social norms and notions of fairness, but not contracts. d. None of the above are correct. QUESTION 33 The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected, a. production is more profitable and employment falls. b. production is...
1. Which of the following statements is true? Sticky wages are caused by contracts that keep...
1. Which of the following statements is true? Sticky wages are caused by contracts that keep wages fixed between businesses and their suppliers, while sticky prices are caused by contracts that keep prices fixed between businesses and workers. Sticky wages are caused by contracts that keep prices fixed between businesses and the government, while sticky prices are caused by contracts that keep wages fixed between businesses and their foreign suppliers. Sticky prices are caused by contracts that keep wages fixed...
QUESTION 62 If there are sticky wages, and the price level is greater than what was...
QUESTION 62 If there are sticky wages, and the price level is greater than what was expected, then a. the quantity of aggregate goods and services supplied rises, as shown by a shift of the short-run aggregate supply curve to the right. b. the quantity of aggregate goods and services supplied falls, as shown by a movement to the left along the short-run aggregate supply curve. c. the quantity of aggregate goods and services supplied rises, as shown by a...
3. The Short-run Aggregate supply (AS) slopes up, because _______________________________________, firms have an incentive to produce...
3. The Short-run Aggregate supply (AS) slopes up, because _______________________________________, firms have an incentive to produce more to earn higher profits. Select the correct answer below: as the price level for outputs falls, with the price of inputs remaining fixed as the price level for outputs rises, with the price of inputs remaining fixed as the price level for outputs rises, with the price of inputs rising too as the price level for outputs falls, with the price of inputs...
QUESTION 64 The sticky-wage theory of the short-run aggregate supply curve says that when the price...
QUESTION 64 The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected, a. production is less profitable and employment falls. b. production is less profitable and employment rises. c. production is more profitable and employment rises. d. production is more profitable and employment falls. 1 points    QUESTION 65 Other things the same, if technology increases, then in the long run a. both output and prices are lower. b. both output...
Explain why the SAS (short-run aggregate supply) curve slopes upward and the LAS (long-run aggregate supply)...
Explain why the SAS (short-run aggregate supply) curve slopes upward and the LAS (long-run aggregate supply) curve is vertical
The demand curve in an individual market slopes down because of the income effect, the substitution...
The demand curve in an individual market slopes down because of the income effect, the substitution effect, and diminishing marginal utility. Looking at the macro Aggregate Demand Curve, describe the three reasons why an increase in the overall price level results in lower aggregate expenditures: real-balance effect, interest-rate effect, and foreign-purchases effect. (Explain each of these three effects.)​
Which of the following statements is TRUE? The aggregate demand curve slopes downward because at a...
Which of the following statements is TRUE? The aggregate demand curve slopes downward because at a higher price level: the purchasing power of consumers' wealth declines and consumption decreases. producers can get more for what they produce, and they increase production. the purchasing power of consumers' wealth declines and consumption increases. the purchasing power of consumers' wealth increases and consumption increases.
The aggregate demand curve shows the relationship between the aggregate price level and: A) aggregate productivity....
The aggregate demand curve shows the relationship between the aggregate price level and: A) aggregate productivity. B) the aggregate unemployment rate. C) the aggregate quantity of output demanded by households, businesses, the government, and the rest of the world. D) the aggregate quantity of output demanded by businesses only. 2.When the aggregate price level increases, the purchasing power of many assets falls, causing a decrease in consumer spending. This is known as the _____ effect and is a reason why...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT